Bonds Rally Following HH “Bally Will Pay” Tweet

Zambia’s dollar bonds grew by 1.1% on Thursday following a tweet by President Hakainde Hichilema assuring investors that Zambia would make good on its foreign debts.

The value of the nation’s bonds, which are due in 2024, grew to 79.8 cents on the dollar by mid-afternoon after the president tweeted that creditors “need not worry” about Zambia’s financial situation.

“Creditors to to Zambia need not worry about our current financial position. We will arrive at an amicable and mutually beneficial solution to our debt. We will engage transparently and in good faith. As the youth of Zambia would say, "Bally will pay,” he wrote.

On Wednesday, the bonds depreciated to their lowest value in over two months after HH gave an interview to Bloomberg news warning that the country’s debt situation was worse than anticipated.

He later told the BBC that his administration had inherited an “empty treasury” and that the scale of debt racked up by the previous Patriotic Front administration had not been “fully disclosed”. Official estimates place Zambia’s foreign debts at over $12 billion - however the real figure is now thought to be much more. 

Following HH’s tweet, however, the bond value has rallied as the market continues to place faith in the new president’s ability to fix the economy. 

Following President Hichilema’s election, the value of the Kwacha surged by 21% compared to the dollar and investors have since flocked to buy up Zambia’s foreign debts. On Friday, the Bank of Zambia raised a record K2.5 billion at a bond auction to foreign investors. 

Zambia faces a long road back to financial security, however President Hichilema has indicated that he is prepared to make the tough decisions, already instigating talks with both the IMF and Zambia’s Chinese creditors. On Thursday he told the BBC he was confident that the Chinese would “understand that we’ve inherited a very difficult situation”.