Africa

The Ugandan High Court on Wednesday ruled that a syndicated loan granted to a local company was illegal in a shock judgment that banks warned could lead to a spike in defaults on $1.5 billion of debt, Bloomberg News reported. The case relates to a loan Diamond Trust Bank Kenya Ltd. provided to a Kampala-based firm with interests spanning real estate to agriculture, using its Ugandan subsidiary as the agent.

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A consensus is emerging among G20 nations to extend a debt-payment freeze next week for poor countries for an additional six months, a French finance ministry source said on Friday, Reuters reported. Members of the Group of 20 economic powers and the Paris Club of creditor nations agreed in April to suspend until the end of the year debt payments owed to them by poor countries to free up resources for tackling the coronavirus outbreak. G20 finance ministers are due to take a decision on what to do after the end of the year when they hold an online meeting next Wednesday, the source said.

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South Africa should act to preserve its insolvent national airline and seek to partner the carrier with Ethiopian Airlines Group, according to a study commissioned for ruling-party lawmakers, Bloomberg News reported. The assessment, seen by Bloomberg, was prepared by African Aviation Services Ltd. and dated Oct. 4. It was presented to a group of African National Congress lawmakers on Monday, according to an ANC official who asked not to be identified because the information isn’t public.

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Ethiopian Airlines Group is willing to provide planes, pilots and maintenance services to beleaguered rival South African Airways as part of a joint venture with that country’s government, Bloomberg News reported. Africa’s biggest airline is offering operational assistance, Ethiopian Chief Executive Officer Tewolde GebreMariam said in an interview in Addis Ababa. The carrier isn’t interested in helping with debt repayments or the cost of reducing the workforce, he said.

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The COVID-19 pandemic could trigger a debt crisis in some countries, so investors must be ready for granting some form of relief that could also include debt cancellation, World Bank President David Malpass was quoted as saying on Sunday, Reuters reported. “It is evident that some countries are unable to repay the debt they have taken on. We must therefore also reduce the debt level. This can be called debt relief or cancellation,” Malpass told Handelsblatt business daily in an interview. “It is important that the amount of debt is reduced by restructuring,” Malpass added.

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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.

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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.

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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.

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