Ratings agency S&P has slashed Zambia’s credit rating to “selective default” after the government missed an interest payment last week and announced it would suspend debt service to external commercial creditors, Reuters reported. Zambia - one of the world’s top copper producers - was struggling with its ballooning debt before the coronavirus pandemic roiled global markets and looks headed for a messy and protracted default.
Zambia’s government said on Tuesday it had adjourned meetings with creditors on a proposal to defer payments on its Eurobonds to Nov. 13 due to a lack of quorum, pushing the copper producer further towards a protracted debt overhaul, Reuters reported. The meetings had been scheduled for Tuesday morning and were expected to gauge support for a delay in interest payments on $3 billion-worth of three outstanding dollar-denominated bonds until April. Two-thirds of holders of Zambia 2022 and 2024 bonds and three-quarters of its 2027 issue were required to vote.
Zambia looks set to move closer to being Africa’s first sovereign default since the onset of the coronavirus pandemic, with bondholders expected to reject a request to put off payments for six months, Bloomberg News reported. A key vote Tuesday by holders of Zambia’s $3 billion of Eurobonds will also be keenly watched by other poor nations considering how to involve commercial creditors in debt-relief talks.
The clock is ticking for Zambia to convince reluctant bondholders to accept an interest-payment holiday while it works out a debt-restructuring strategy, Bloomberg News reported. If investors refuse Zambia’s request for a six-month standstill in a key vote on Tuesday, it may become the first African nation to default since the onset of the coronavirus. That could set a precedent for how cash-strapped governments treat private and Chinese creditors. The southern African nation isn’t making it any easier for bondholders to give it breathing space.
Zambia skipped an interest payment on its debt, moving closer to becoming the first African nation to default on dollar bonds since the onset of the coronavirus pandemic, Bloomberg News reported. Holders of Zambia’s $3 billion of Eurobonds will vote next week on the country’s request for a six-month interest-payment holiday. A core group of creditors have already rejected the proposal, prompting Zambia to say it won’t be able to service its commercial debts including the bonds unless it gets the relief.
Zambia has warned it is ready to become the first African country to default as a result of the coronavirus pandemic if investors in its $3bn worth of US dollar bonds reject a request by the southern African nation to suspend payments, the Financial Times reported. Africa’s second-biggest copper producer, which is attempting to restructure its $12bn of external debt, has become a crucial test of global efforts to help emerging nations find debt relief as the pandemic devastates their economies.
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.
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.