Zambia’s Bonds Drop On Expected Restructuring

Zambia’s bonds have slumped after the country’s government called in advisers to help restructure its debt, as investors worry that the coronavirus crisis could trigger a wave of defaults in emerging markets, the Financial Times reported. The copper exporter was already struggling with a growing debt burden, much of it in the form of loans from China, before the pandemic caused big outflows from emerging-market debt funds and a plunge in metals prices. On Tuesday, Zambia’s finance ministry contacted banks asking for advice on restructuring up to $11.2bn of foreign debt, according to Bloomberg. The ministry also said it will not restructure without first consulting creditors and it aims to get its debt on a sustainable footing. The country’s dollar bonds, which have long traded at a sharp discount to their face value, tumbled further to around 38 cents on the dollar. The bonds traded in the low 60s at the start of the year. “This is the government recognising what the market already knew,” said Kevin Daly, a fund manager at Aberdeen Standard Investments. Read more

Location