Africa

Zambia has started talks with its bondholders a day after an investor committee rejected the country’s request for an interest-payment standstill, saying it needed more information on restructuring plans, Bloomberg News reported. Dialog has commenced between representatives of some of the Eurobond holders and Lazard Freres SAS and White & Case LLP, which are advising Zambia’s government, according to two people familiar with matter, who asked not to be identified as the talks are sensitive. While Zambia’s Finance Minister addressed creditors in a webcast on Sept.

The world’s poorest countries could soon be facing a tough decision -- double up on debt relief from the G20 with the caveat they must default on private creditors, or quit the programme to try to keep financial markets on side, Reuters reported. Rich countries on Friday backed an extension of the G20's Debt Service Suspension Initiative (DSSI), approved in April to help developing nations survive the coronavirus pandemic and which has seen 43 of a potential 73 eligible countries here defer $5 billion in 'official sector' debt payments.

Foreign bondholders are minded to block Zambia’s plans to suspend interest payments without assurances of equal treatment with large lender China, indicating that the test case for a potential string of pandemic-related defaults across Africa could prove contentious, the Financial Times reported. A group of creditors, which includes hedge funds such as Pharo and Amia Capital, is concerned the government is not being clear about the true scale of the Chinese debt it has accumulated in recent years, people familiar with the matter said.

Zambia hopes to reach a debt restructuring agreement with creditors by April and hopes to get nearly $1 billion of debt service relief from its requests to official and commercial creditors, Finance Minister Bwalya Ng’andu said on Tuesday, Reuters reported. One of the world’s largest copper producers, Zambia had been wrestling with growing public debt even before the coronavirus outbreak forced lockdowns around the world and cut demand for raw materials.

Zambia‘s very weak credit profile (Ca stable) reflects “unsustainable debt dynamics and heightened liquidity” Moody’s Investor Service said this month, Emerging Market Views reported.

South Africa’s National Treasury wants strict conditions attached to any guarantees it provides for loans to the country’s embattled state airline, according to two people familiar with the matter, Bloomberg News reported. Treasury and Department of Public Enterprises officials met Saturday to discuss ways to restart South African Airways, the people said, asking not to be identified because the talks are private. Representatives of two South African banks attended the talks, they said. SAA halted operations and sought bankruptcy protection in December.

Bondholders are facing “significant losses” as Zambia battles to bring its debt under control, according to Moody’s Investors Service, Bloomberg News reported. They’re now asking: who’s next? The southern African country this week asked for a six-month interest-payment holiday to give it “breathing space” for a debt restructuring, a move that may buy it time but won’t do anything to solve its longer-term debt problems, Moody’s said.

G7 finance ministers on Friday backed an extension of a G20 temporary freeze in debt payments and recognized the need for broad debt relief in the future, while taking aim at G20 member China over a lack of transparency in its lending, Reuters reported. The G20 Debt Service Suspension Initiative (DSSI), approved in April, is aimed at helping developing countries get through the fallout from the coronavirus pandemic. So far, it has helped 43 countries defer $5 billion in official debt service payments.

While the world's second largest copper exporter has asked for a delay in paying its interest, Chad, Congo and Angola are also facing serious financial difficulties due to falling oil prices and the pandemic, The Africa Report reported. Will Zambia be the first African state unable to pay its debts after the coronavirus crisis? On 22 September, the world’s second largest copper producer asked its private creditors to defer payment of interest until April. This deferral, which represents a sum of $120m, concerns three bond issues totalling $3bn issued in 2012, 2014 and 2015.

Angola’s central bank has ordered lenders to give their clients the option of converting their foreign-currency mortgages into kwanzas, Bloomberg News reported. The move aims to reduce the risk of default amid a sharp depreciation of the local currency of Africa’s second-biggest oil producer. Only bank customers whose income is paid in kwanzas qualify, the central bank said in a statement published on its website Wednesday.