Zambia

The true size of Zambia’s debt is “debatable” because the country has contracted more loans than official external debt numbers show, Bank of America Merrill Lynch analysts said. While the nation signed up for $5.3 billion in debt from 2015 to 2016 and the lender estimates it contracted another $4.4 billion last year, official external debt only grew $1 billion over the period, analysts Rukayat Yusuf and Andrew Macfarlane said in an emailed note on Thursday, Bloomberg News reported.

Investors fretting that Zambia may have more debt than it’s let on have sent the nation’s Eurobonds tumbling, Bloomberg News reported. Yields on the copper-producing country’s $1.25 billion amortizing bonds due in 2027 rose as much as 54 basis points, the most since February 2016, before paring the increase to 50 basis points by 4:35 p.m. in London. At 8.45 percent, the yield was the highest in more than a year. Banks including Nomura Holdings Inc. say the government may have greater external liabilities than it’s made public.

Zambia is facing tough questions over its foreign-debt levels from investors who think the real number may be more than double what the government says it is, Bloomberg News reported. Lenders including Nomura Holdings Inc. believe the state hasn’t come completely clean on how much external borrowing it’s undertaken. This is raising concern the southern African nation may be headed for a similar situation to neighboring Mozambique, where hidden debts led to default and the government is seeking to restructure.

It’s been a bad start to the year for Zambia, Bloomberg News reported. Its Eurobonds are the worst-performing debt among emerging-market sovereign issuers, having lost 5.8 percent, according to Bloomberg indexes. On Monday, the kwacha weakened 1 percent against the dollar, the most globally, to its lowest level in almost six weeks. Doubts over whether the government will secure a $1.3 billion bailout from the International Monetary Fund have resurfaced among investors.

Zambia’s cabinet approved plans to restructure the country’s loans from China after the International Monetary Fund said Africa’s second-biggest copper producer was at high risk of debt distress, Bloomberg News reported. The government will also source financing directly from Chinese lenders rather than through contractors in a bid to cut the cost of borrowing, the presidency said Tuesday in an emailed statement.

Mineral-rich Zambia has announced a program of austerity measures to try to close a gaping budget deficit and restore confidence in southern Africa’s third-largest economy amid a global commodity bust and crippling power blackouts, The Wall Street Journal reported. The proposed measures, which include scrapping subsidies on gasoline and diesel, will save the state $300 million, the Zambian presidency said Friday.

Zambia is planning its largest sale of debt as the copper-rich country seeks to plug a yawning gap in government finances, the Financial Times reported. The southern African nation is planning to raise over $1bn this week and is expected to pay a higher rate than it has for previous issues as investors adopt a more cautious approach to buying emerging and frontier market debt.

Professional Insurance Corporation Zambia (PICZ) Limited has sued Zambian Airways Limited for US$135,916 (K754 million) debt in unsettled premiums, the Zambia Daily Mail reported. On January 13, 2009, following the airline’s failure to settle the outstanding insurance premiums, the insurance cover was cancelled and Zambian Airways was charged premiums for time on risk amounting to US$135,916. In addition, the Lusaka High Court has ordered an attachment of all identifiable assets belonging to Zambian Airways, which has now been placed under receivership by its lenders.