Zambia signs deal with China, India to rearrange debt

Zambia’s dollar debt increased following a government announcement confirming that China and India, the last two countries required to finalise a deal to rearrange Zambia’s debt have agreed to make the move, Bloomberg reported.

The value of Zambia’s $1.25 billion notes maturing in 2027 experienced the largest single-day increase in price since October. As of 9:44 a.m. London, they were trading at 68.58 cents on the dollar, marking the highest level since June 2022.

“China and India agreeing on terms means that we can get on with the private-creditor restructuring,” Sam Singh-Jami, Africa strategist at Rand Merchant Bank told Bloomberg.

“We are now a step closer for Zambia to restructure all of its external debt in a very protracted process.” He added.

“We’re getting there,” President Hakainde Hichilema stated on Zambian state-owned television, on Saturday.

“Now we are turning our attention to the private creditors.” Also said.

In October, Zambia successfully negotiated a memorandum of understanding (MOU) with official creditors to restructure $6.3 billion of debt. However, discussions with other creditors, such as the holders of $3 billion in outstanding Eurobonds, have hit an impasse since November. This deadlock arose when the Official Creditors Committee, co-chaired by France and China, rejected a preliminary deal that the administration had reached with these investors.

Notably, after defaulting in November 2020, the southern African nation decided to utilize the Common Framework to restructure its debts three years ago.