Zambia and Creditors to Restart Bond Restructuring Negotiations

Foreign investors are set to restart talks with Zambia officials on a deal to restructure $3 billion of global bonds, marking a potential turning point in the African nation’s years-long effort to lift itself out of default, according to people familiar with the matter. 
A group of bondholders that includes Amundi UK Ltd, RBC BlueBay Asset Management and Greylock Capital Management, received a proposal on the debt from the government last week, according to the people, who asked for anonymity because the proposal has not been made public. They didn’t provide details of the offer. The creditors entered into non-disclosure agreements this week, signaling the start of negotiations. 
Zambia government representatives didn’t reply to messages seeking comment. Representatives for the bondholder committee declined to comment.
The sides are trying to reach a deal before next month’s International Monetary Fund meetings in Washington, D.C., but an agreement may come within days, one of the people said. 
Zambia’s dollar bonds due in 2027 have gained about 10 cents since the start of the year to trade around 71 cents on the dollar, according to indicative pricing compiled by Bloomberg. 
Progress on the long-stalled negotiations come as another African nation, Ghana, also kicked off talks with bondholders as it seeks to rework about $13 billion of its bonds. 
Read more: Ghana Bonds Surge With Debt Restructuring Talks Near 
As Africa’s first nation to default on pandemic-era debt, Zambia is seen as a test case for how debt restructurings work under the G-20’s Common Framework. The initiative, unveiled in 2020, is designed to help poorer countries overhaul loans with all creditors — sovereigns as well as bondholders and commercial lenders. 
Read more: IMF Lending Near Record $150 Billion to Counter Debt and Wars
It has faced criticisms for causing long delays in negotiations. Zambia initially struck an agreement last year with the official group of government lenders that China and France co-chair to rework $6.3 billion in debt, and later reached a separate accord with holders of Eurobonds.
However, the official creditors in November rejected that deal, saying it wasn’t comparable to the relief they’d agreed to grant the southern African nation. They also didn’t say what they would accept as comparable treatment, throwing the entire restructuring into question.
With assistance from Eric Martin and Taonga Mitimingi.
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