Zambia’s finance ministry said on Thursday it had reached an agreement in principle on debt restructuring terms with a creditor group holding its international bonds, a milestone in its drawn-out debt rework process.
The agreement will see the three existing bonds restructured into two new amortising bonds maturing in 2035 and 2053 respectively, under a “base case” scenario. Both bonds would mature in 2035 if Zambia’s economy performs better. Under both scenarios, the deal would translate into an 18% nominal haircut, the ministry said.
Zambia was the first African country to default in the COVID-19 era, in late 2020, and its restructuring process suffered numerous delays. International bondholders also complained they were left out of the process, which started with drawn-out negotiations with bilateral creditors including China.
The agreement “paves the way for similar restructuring agreements with our other private creditors,” Zambia’s finance minister Situmbeko Musokotwane said in a separate statement.
“We hope for the swift implementation of this agreement in principle by the end of the year.”
