Bondholders reject Zambia’s request for debt relief

BONDHOLDERS have rejected Zambia's request to grant debt relief for six months, adding more pressure on how the country will sustain its debt.

The bondholders yesterday rejected a request to defer interest payments due on each of the bonds during the period from October 14, 2020 until April 14, 2021.

This means that the modifications and waivers, including the deferral of interest payments due on each of the bonds requested by Zambia will not be implemented.

Responding to the decision by bondholders, Finance Minister, Bwalya Ng'andu, regretted that there was no approval.

Zambia missed payment of US$42.5 million coupon on one of its dollar denominated sovereign bonds last month and the grace period was scheduled to end yesterday.

The country has US$3 billion of Eurobonds outstanding and owes US$2 billion to commercial banks, US$2 billion to the IMF and World Bank and another US$3 billion to China.

"While Government regrets that the bondholders did not approve the requests made by Zambia in good faith, we remain committed to finding a consensual and collaborative resolution to debt sustainability issues," Dr Ng'andu said in a statement yesterday.

Dr Ng'andu however said Zambia would continue to engage in constructive dialogue and share information with the ad hoc committee of bondholders and all other creditors.

He said this was in light of the fiscal and economic challenges the country faced.

Zambia, he said, remained resolute to adhere to the principle of transparency in its engagements with the creditors.

He expressed confidence that there would be an appreciation that agreeing to consensual standstills or accruing arrears were the only options available to the country while we design a plan to put our debt on a sustainable trajectory.