Zambia’s three-year debt restructuring takes step forward
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By Marc Jones and Rachel Savage
LONDON/JOHANNESBURG (Reuters) – Zambia reached a debt restructuring deal-in-principle with its international bondholders on Monday, bringing the southern African country closed to finishing a complex process that has lasted more than three years and been beset by numerous delays.
Below is a condensed timeline of key events:
2019-2020: Zambia faced challenges in repaying its debts, including its international dollar-denominated government bonds known as “Eurobonds”.
May 2020: Zambian President Edgar Lungu’s government hires French firm Lazard (NYSE:LAZ) to advise on restructuring the cash-strapped southern African nation’s foreign debts, then officially said to be $11 billion.
June 2020: The country requests to have its debt payments frozen under the G20-led Debt Service Suspension Initiative (DSSI), which was established in response to COVID-19.
November 2020: Zambia misses a $42.5 million payment on one of its international bonds, making it Africa’s first pandemic-era sovereign default.
February 2021: Lungu’s government requests a debt restructuring under the G20’s Common Framework, a process also set up in response to COVID-19.
August 2021: Opposition leader Hakainde Hichilema secures a landslide victory over Lungu in a presidential election.
October 2021: Zambia’s finance ministry says its external debt was almost $17 billion on June 30, 2021, with debts to Chinese lenders almost twice the previous official figure.
June 2022: Governments that have lent to Zambia form an “official sector” creditor committee (OCC) to formally start restructuring their loans to the country.
July 2022: Zambia’s OCC, co-chaired by China and France, commit to granting the country debt relief, paving the way for the International Monetary Fund to approve a $1.3 billion, three-year rescue loan.
June 2023: The OCC agrees to restructure its combined $6.3 billion worth of loans to Zambia.
Just over $4 billion of that money is owed to the Export-Import Bank of China, underlining the importance of Beijing’s support for the deal.
October 2023: The government reaches an “agreement in principle” with a group of international investment and pension funds that hold $3 billion worth of its sovereign bonds that it had sold on the global capital markets.
The deal proposes consolidating that debt into two bonds with easier terms and longer payment deadlines, but also additional faster payments if the country’s economy does well.
November 2023: The deal suffers a major blow after the government says that its bilateral “OCC” creditors had vetoed a revised deal with its bondholders on the grounds that it still does not provide enough debt relief.
Angry bondholders say the OCC is demanding debt relief from them that is materially higher than either Zambia’s government or the IMF deem necessary.
January 2024: Zambian officials travel to China for debt talks with its Chinese creditors, including the Export-Import Bank of China and commercial banks.
February 2024: Zambia’s President says India and China have signed restructuring agreements, the last two of its bilateral creditors to do so.
March 2024: The government starts formal talks again with the international bondholder group on a new debt rework proposal.
