Zambia's Historic Eurobond Restructuring: “Economic Recovery Back on Track” Says Hichilema

Zambia has successfully restructured over K80 billion in eurobonds, a significant step in its efforts to escape debt default.

President Hakainde Hichilema said in a statement on X: “History has been made! We are pleased to announce the agreement with our Eurobond holders… Thank you fellow citizens for your patience as we look forward to a bright future for Zambia and its people.”

The finance ministry confirmed that the agreed terms aligned with the assessments of the official creditor committee and the parameters of an International Monetary Fund (IMF) program for Zambia.

Investors responded positively to the news, with Zambia's dollar eurobond maturing in 2027 experiencing a substantial gain, the largest since February 26, 2022.

As the first nation in Africa to default on debt in 2020, Zambia's successful restructuring serves as a test case for the Common Framework, offering insights for other nations like Ghana, currently in negotiations with creditors.

The agreement with eurobond holders marks progress for the G20 Common Framework, designed to assist poor countries in restructuring debts with various creditors.

Bondholders agreed to forgo approximately K22 billion of their claims and provide cash flow relief of around K67 billion during the IMF program period.

Zambia still needs to finalise deals with other commercial creditors, including Jiangxi Bank Co. and Industrial and Commercial Bank of China Ltd.

The agreed weighted average maturity periods under the Base Case Treatment and the Upside Case Treatment are 15 years and eight years respectively.

Zambia's finance ministry emphasised the necessity of concessions from bondholders to achieve relief required under the Debt Sustainability Analysis and restore financial stability.

Initially, Zambia reached agreements with official government lenders co-chaired by China and France to rework almost K169 billion in debt. However, an agreement with eurobond holders was rejected by official creditors in November, citing lack of comparability with the relief granted to Zambia.

The restructuring is a considerable achievement for President Hichilema’s government, who inherited the debt from the previous government. The President thanked citizens for their support over the past three years, and said the country’s “economic recovery is back on track.”