The committee’s members hold about 40% of the southern African nation’s $3 billion of outstanding dollar bonds, and at least 25% of each, enough to vote down the proposal. Bondholders abstained from previous votes that had been set for Oct. 20, prompting the adjournment to Nov. 13 to allow the government more time to convince them to accept the proposed six-month payment freeze.
Zambia Gets Lifeline With Time Running Out to Avoid Default
Zambia said it is seeking equal relief from all external creditors, and the government’s approach to private lenders and mainly state-owned Chinese lenders could set a precedent for a growing number of countries seeking to reprofile debts they can’t afford to service as the pandemic ravages their economies. The world’s largest economies will on Friday decide on a common framework to co-ordinate future debt restructuring among private and official lenders.
Chinese Lenders
But the finance ministry has failed to provide transparency on its debts to Chinese lenders or inform bondholders of any progress in reaching a deal with the International Monetary Fund on an economic program, one of the people said. There has also been no direct talks between the government and bondholders, the person said.
Zambia’s finance ministry didn’t respond to four calls and text messages seeking comment.
The government of Africa’s second-biggest copper producer has already missed a $42.5 million coupon payment scheduled for Oct. 14 on its $1 billion bonds due 2024, and a 30-day grace period ends on Friday. Zambia’s already said it won’t pay if it isn’t granted a standstill, which would trigger a default giving bondholders the right to demand immediate repayment of the capital. S&P Global Ratings Services last month cut its assessment of Zambia’s debt to “selective default”.
While Zambia has said it’s seeking the relief from private creditors as part of the G-20’s Debt Servicing Suspension Initiative for low-income countries struggling from the economic fallout of the pandemic, the southern African nation’s debt troubles have been building for years. The IMF already warned in 2018 that Zambia was at high risk of debt distress, and the government continued adding billions of dollars more in external debt, which has climbed to about $12 billion.