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Zambia requests to suspend Eurobond interest repayments

Members of the Zambia External Bondholder Committee said they reject their government’s decision to request for suspension of Eurobond interest repayments, owing to lack of debt transparency among other things.

The committee said the government had not engaged with the group since its formation in June and that the budget presented to parliament last Friday moved the country further away from a path to debt sustainability with long-standing fiscal imbalances not being addressed.

Zambia, being one of the world’s largest copper producers, has been wrestling with growing public debt even before the covid-19 pandemic forced lockdowns and cut demand.

Last week, Zambia proposed deferring interest payments on its three outstanding dollar-denominated bonds to give it time to finalise a debt sustainability analysis and sketch out the parameters of a restructuring plan.

Also read: Zambia seeks restructure deal with creditors within six months

“While the Committee stands ready to engage constructively and proactively on finding ways to support Zambia, its members are unable to provide a positive response,” the Zambia External Bondholder Committee, which holds a blocking stake, said.

The committee consists of 14 U.S. and Europe-based financial institutions which hold in aggregate some 40% of Zambia’s outstanding Eurobonds, including at least 25% in each of its three outstanding Eurobonds.

The Committee says the 2021 national budget moves Zambia further away from a path of debt sustainability, as long-standing fiscal imbalances have still not been addressed. In a statement jointly-issued by Newstate Partners LLP managing partner Spencer Jones and Rafel Molina, Wednesday, the duo disclosed that the Committee’s members were unable to provide a “positive response to the Zambian requests.

Source: Taarifa Rwanda

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