Secretary to the Treasury Fredson Yamba has confirmed that the PF Government is considering refinancing the two Eurobonds when they fall due.
Refinancing of bonds refers to the reselling of existing instruments when they reach maturity to fresh financiers who will issue new conditions and new repayment schedules.
The two Eurobonds that the PF Government issued, one for US$750 million and another for US$1 billion are falling due in 2022 and 2024 respectively.
This will require government paying back the full principle amounts of S$750 million and US$1 billion besides the annual interest payment being made.
Mr Yamba told Journalists in Lusaka that Government is seriously considering reselling the debt to fresh financiers as a way of avoiding defaulting on the repayments.
He said talks have commenced with key stakeholders including the book runners who were involved in the two issuances on possibility of refinancing the bonds.
Mr Yamba also revealed that the other option is to set up a sinking fund which will hold certain amounts which could be redeemed at the time of making the fill payments on the bonds.
He said the sinking fund could be held in US dollar or in Kwacha but added that it would require setting aside funds which could ordinarily go into the social sector.
‘On refinancing, this involves asking prospecting financiers to buy that bond and give you a longer maturity period so that come 2024 or 2022, you don’t need the actual cash to pay back that bond and somebody buys that bond and gives you a longer maturity period, say more 20 years,’ Mr Yamba explained.
He added, ‘We are looking at these options and we shall ensure that there is no fiscal distress come 2022, so that the nation is comforted that there shall be no anxieties that we shall fall to pay back that bond come 2022 and 2024 when they fall due.’
Mr Yamba confirmed that Zambia’s total debt stock currently stands at 4.8 billion US dollars.
PF should not worry about 2022, they will be out of office in 2016.
You are rite.why talk about 2022.PF will be no more. we have a vote crisis
Why do today’s leaders want to place our children into financial slavery.Do you not have foresight? The actions of today will affect tomorrow.That is why Zambia looks the way it does after 50 years of independence. Who will deliver us from these Id..i…ots in power?
This is the Chipantepante we talk about. A govt being run by clueless people. Everything is an after thought. Countrymen, we need proper planning for this economy.
Ba Lsk Times your writer is off..the headline says ..”EU Bond” no such thing as an EU bond shouldve said. Eurobond..as correctly put in the main article.
Continue dreaming I like that.
Pipo who live on kaloba, even mu komboni, are always in trouble! kuponoka everyday by the shylocks. Mailo na mailo ku polisi na ku koti, bapoka nsapato olo njinga. Ati iyai tikongole tiyambe bizinesi, kuti…………!
Same same na Zambia
When we told you that you are voting for baboons (bakolwe)
did you not insult us?
Eish!!! Yaba! This is so disappointing! You have been lying to us that the debt is at acceptable levels but when the time to pay comes you go to beg again! This is scandalous and the most shameful part is that the common man doesn’t realise that you have been lying. Iye, ba PF … what did we do by voting for you? 🙁
@ 1.7 the engineer
monkeys are way way better than tribal bantustan party that have members like yourself.
I would not hesitate to give baboons another vote instead of voting for hyenas
SO U THINK THEY WILL BE OUT BECAUSE OF YOU, COZ YOU SAY SO? WALOBA ILYAUMA!!! GOOD MOVE GRZ, THANKS
PF a few months ago, on this site you were reminded that it was impossible to borrow one’s way out of poverty, unless there is a grand plan of how to replay and utilize the money borrowed in a productive way which will support the paying of the interest rates and the principle. But insults were the order of the day whenever this was raised as an issue with your borrowing in the morning and evening with clear plans on how use or repay the loans.
Look at the bottomless hole you through the money called Zambia Railways, it is now asking for more funding…. PF reselling the bond is simply committing the next generation into a debt trap.
Well it is obvious that the PF govt will default the payment and hence these schemes already mushrooming. This is the problem of having a govt that is simply bent on borrowing and spending without the brains for creating finances with industries and other sources. If there is nobody buying the said bonds, then what is your plan Mr. Yamba? I guess borrow more to service the loans!
Why are we still contracting more debts if we cant even handle the current ones. Did we have a repayment plan or we had no intention of paying back. That is how crocks think.
Yesterday you were saying that the Government is within the borrowing thresh hold. So why are you worried and talking about selling this or that bond? These commitments you have made like it or not will come to hound us one day. This generation or the next generation.
IFINTU NINKONGOLE – IFINTU KUKONGOLA
Lets wait and SEE
Wait and see what? Bankruptcy? Miracle?
By the time you finishing waiting your country will be down in the dumps, luckly you have a oppotunity to redeem it next year, by then I’m sure you’d have finished waiting and will be seeing crystal clear
And those who said “wait and see” in 1964, what are they seeing now?
Better is to have an opinion on your future than to write useless nonsense!
This is where H H makes sense now,what did we do to have a curses govt like PF? No one knows how the whole amount was used sure! Tribalism indeed has killed Zambia. “Tongas will never rule” but when it comes to suffering it is bemba inclusive.after he destroyed the country only to die and busy rotting at Embassy park.next is Chikwanda,Edgar etc all these ballies will die leaving tongas and bembas in more problems. The next govt will use the same debt as an excuse for not developing the nation as it will be paying back nkongole worst still if it is PF in govt. Blacks are just *****s by nature.they will always be slaves of western countries.no wonder we are called monkeys.
The true intention is to look for more funding to fill the annual $2bn sinkhole from the budget.
So they will go borrow with say 2030 maturity and with these new funds pay off the 2022 and 2024 maturities. The net effect is to extend forward the repayment dates.
On this basis they will hoodwink us to allow them to borrow more. However, they will take the 2030 money and blow that as well for electioneering developement but not use it to repay the first loan. Watch what they do. Any smokescreen to go borrow more.
Facts are that if you are not credit worth, it is hard to borrow money from anyone unless from those who do not know about you. The international financiers know the credit worth of Zambia and if anyone is willing to buy those bonds, Zambia is then sold for generations to come and will remain struggling. No wonder Africa remains poor, it is due to leaders without vision. What did we use this money, and in the first place why did we get it?
I recall HH talked strongly about this and wondered why PF government resorted to getting the Euro bond instead of revising the mining tax and generate money locally.
The original basis of these loans was zesco, tazara, roads etc. The intention was that come maturity date, these investments start kicking dividends which repay the loans.
Roads stimulate the economy and bring more taxes. Tazara earns transport fees. Educated graduates from universities grow the economy and expand tax base. Zesco earns more revenue. The developement pays itself off in 10 years.
From what the Honourable is saying, all this expenditure we have done to date cannot pay itself off in 10 years. Its called non-productive expenditure. A 3 legged horse. A complete non-starter
Stop misleading people. Productive sectors, say, agriculture or industry are the ones that can bring about development in Zambia and not the roads which are only meant for people to see. Investment in agriculture will increase demand for irrigation equipment, fertilisers, seeds, roads, and communication and stimulate greater investment in these industries that produce or utilize them while at the same time create employment in both the stimulant and stimulated sectors. Investment in ZESCO would make available cheap electricity and this electricity is expected to encourage the growth of small scale industries, irrigation works and thus in the end stimulate the growth of the agriculture sector. Its not just about any road no. What development can a dual carriage to Chilenje stimulate?
@ ?B(E.L)INDA NAFWA
Great in theory. One small clarification if you may please:
“…Investment in agriculture will increase demand for irrigation equipment, fertilisers, seeds, roads, and communication and stimulate greater investment in these industries that produce or utilize them while at the same time create employment in both the stimulant and stimulated sectors…”
At current Long Term interest rates @ 22.5% p.a. for secured loans because our “visionary ” Minister of finance collect every single Ngwe through BoZ to finance servicing of loans, bonds, cost of bloated civil service and inbreed corruption at all level of government?
Theoretical Dream.
Corner stone of development are entrepreneurs. Without them, no development.
If they were serious about using the money on roads that can generate an income the should have started with Chingola -Solwezi Road. Hopeless Government
The Eurobonds were brought in at an exchange rate of K5,50. Today the rate is K7,50.
Just to repay the capital we need to look forK3,5 billion (K3,5 trillion unrebased) to cover the exchange loss. Have our developements generated this plus interest ?
Without mining tax, with BOZ tightening liquidity, with $2bn annual budget shortfall, where are we heading ?
The next generation of Zambians will be left to pay off this. Thats when bwana IMF will step in with the yoke and chains of austerity measures.
Self-inflicted slavery. The Zambian freedom statue breaks the chains of colonialism around his wrists then wraps the chains around his own neck and gives it back to colonialists.
and all the projects for which the loans were acquired have are yet to be completed
And the moneys have been used to improve private investment in SA real estate?
Are we going back to the Vulture Funds issue? Zambia – we burnt our butts to have debt cancelled. Magande and Team did so well to get us back on track with fiscal discipline – we now seem to be off track again.
More borrowing is on the way. Chikwanda had a great idea – have only one tax for the mines and tax them high so we can generate money – but because we are a weak nation – powerful companies have strangled us and beaten us into submission – we have reduced the royalty fees and gone back to cartel controled multiple tax regime.
Zambia needs free thinkers. We are not free yet we are mentally enslaved. It will take time to break our chains of this psychological slavery that makes us fail to negotiate what is good for Zambia – always benefiting others outside Zambia.
Chikwanda didnt have a great idea sorry. After govt realized they couldn’t pay back, chikwanda decided to fix the mines. If this wasn’t the case the upwards adjustment of the tax would have been the first thing the PF would have done. This a classic case of f**king up and expecting someone else to clean up your mess.
…those are signs that we are in maningi trouble………reselling simply means more money and new ‘tougher’ conditions…..the sad part is that none of the current debt architects will be in govt or alive when these bonds mature…….the govt then will be at pain to explain to its electorates why the economy then shall be in shambles….why they will be failing to improve their livelihood…..
…now is the time to open our eyes wider and see who are personally benefiting from these loans….state of art guest houses mushrooming everywhere…some using relatives names to disguise……those must be marked and reposed when right time come and dispose them off to help repay the loans…….
Zambians Zambians you don’t seize to amaze me.I told the reason to rush to borrow Euro bond(Kaloba) was Sata’s project to quickly en rich himself by siphoning this money via state house using RDA to foreign accounts in Turkey and singerpo.Sata knew his life span on earth was short.I was close to Sata at one time through his son.I know everything because one he told me how his plan will work.He was speaking in his Bemba language at elo ndelola nala chita make sure abana I leave them a pasuma.he after his death no one will probe his estate because Zambians are sympathetic.Sata is the causer of our current and future misery with his Kabimba as a his handman.
Almost four years on since the first bond was issued, can anybody point at a single project that is on its way to yielding dividends for the Zambian people? Could it be Zambia Railways? Perhaps Service delivery by Zesco is showing signs of improvement? Oh wait, maybe the much talked about national airline has aquired some aircrafts by now? Or I’m sure the much talked about universities, hopitals and roads are well on thier way to complition right? I mean $4.8 billion (plus money saved from removal of subsidies) is quite a substantial budget to work with. Classic case of biting on more than you can swallow.
There!!! There!!! There!!! Ladies and gentlemen we are hanging by the balls. Sata and team have done us in. . . But we have most likely done ourselves in. Incompetence with/without money is still incompetence, yes am talking about ministry of finance and PF’s general approach to development.
If my Maths is right then every Zambian citizen is $3.7 million in debt.
Wow!!!11 we are in trouble and we need to stop this now.
It could be time before quality savings ensure the maturity profile of the bonds fits in repayments of the Securities par values and make a return either qualitatively or quantitatively before 2030 profile Refinancing is the issue
Its well thought and understood that the refinancing will not be as exciting as previously at yields and tenure favourable with initial primary dealers who participated may not participate to support and ensure secondary liquidity support on major trading platforms making it risk of rating down grade to similarly Greek Volumes of trade could be very low to ensure cost effective yields that compensates the risks in that default and rollover risk eroding previous gains
@ Jonathanmhango Financial Analyst
Translated: THEORETICAL CRAP
Its a correct admission of maturity mismatch given quality of projects invested taking time to create tangible savings to support the sinking fund provision
It will be cheaper and effect to do a currency swap of these bonds and avoid the hook
Doing a currency swap with Chinese bond buying programme will be cheaper as way of refining those Par values and Coupons as they arise
Its same principal and measure taken buy brazil Brazil and Argentina ,taking advantage of the excess liquidity to manager and hedge in the commodities
Its a correct admission and can only be supported by well meaning individuals in failing copper prices and weak fiscal position
Its can be for part…
@ Jonathanmhango Financial Analyst
Translated: DOUBLE THEORETICAL CRAP
It can be in part or full Certainly the initial method as a replica will yield little tangible results and most primary dealers may not participate risking the junk status and higher cost in yielding and maturity refining given fundamentals in savings and returns to financial the rollover
Volumes in trade will be thin and previously costly to replicate and attract quality investors in those indentures that could now be more restrictive and negative to ensure next time repayment on maturity
@ Jonathanmhango Financial Analyst
Translated: TRIPLE THEORETICAL CRAP
So, this guy wants to sale the debt to vultures? I can’t just believe it. This will be a grave mistake. Our children will pay through their noses. We must not accept to pass such a huge debt to the next generation. We borrowed, we must pay for it, period.
Sovereign Hedging here will help and ensure sustainability with regional support and partners like Americans and Germans as Chinese seem to lead
But for future regional financing blocks in sub Sahara driven by South Africa ,Nigeria ,Angola and other rich resource countries will help solve most of the financing Gap and bridge the Gap with developed
Sovereign hedging in bond buy out here will help and china appears the most willing to assume
Jonathan I am sure your contribution is well intended but all the jargon you are using makes it meaningless to majority of the people on the blog reading it. I work in the financial sector, although not in capital markets, but I can hardly understand a word you are saying. Best if you use ordinary day to day language to explain the same concepts for the majority of us to understand what you are saying. Ability to present complex issues in simple terms is an indication of true expert knowledge.
@ Jonathanmhango Financial Analyst
Translated: QUADRUPLE THEORETICAL CRAP
@ blabla
“Jonathanmhango Financial Analyst”, please correct me if I am wrong, did NOT make any attempt to “personalize” theory to current financial situation prevailing in Zambia and instead quotes from past debacles, i.e. Argentina and Brazil.
Concepts are “great” when presenting it as theoretical exercise, but to justify financial action without “hard facts” amounts to either financial incompetence or 1mbecility.
Make use of the “‘PAC DBIA ” also it can prove very useful in the case of Zambia institutional capacity apart from just commodity driven for long term sustainable development
On the personal note I have come to prove that American education in Finance and Financial engineering is always the best and thorough, combined with the uniqueness of Chinese capital and hard work ,the African potential in resources, Zambia and other Africa in regions can massively benefit to great potential
YOU CAN NOT GET ALOAN BASED ON CONSUPTION NOW ALL THE PROJECTS ARE ON HALT AND NO MONEY TO PAY BACK.CAN WE CONTINUE ON THIS PATH?
RB WAS PRESIDENT ARE ALL EASTERNS NO LONGER IN POVERT?
SATA WAS PRESIDENT BUT LUAPULA PROVINCE IS THE POOREST IN ZAMBIA.
TRIBALISM OR REGIONS WILL NOT HELP ZAMBIA.LOOK AT THE EXCHANGE RATE ARE BEMBAS OR EASTERNS SPARED?
2 Billion Dollars is not a lot of money for a sovereign country like Zambia to sing home about Its money for a single cash flow for a quality corporate we need to attract to our resources
Its not a forgone conclusion even companies like apple ,GE,Teck resources and many euro and chines companies annual earnings and cash flow generated exceeds this debt in mergers and acquisions
Lets learn to attract quality investors and partners with quality capital to investment in our quality assets in commodities
Its not money when even Volkswagen with its or any investing firm can buyoff Zambia’s debt on its own without securitization lets market Zambia’s potential well not as a forgone…
This is a serious matter which we must not gloss over as a nation. We are not that stupid to accept this. The PF gvt is so irresponsible and should not put us into such debts we cant get out of. Irresponsible borrowing shouldnt be encouraged. We should all be up in arms about this. Much of the mo0ney went to PF families and no single project has come through so far yet they want another loan. NO NO No No. Where are the other leaders in the country????We should nt accept this, At all
Even Wal-Mart has assets way above 2 billion dollars about 250 billion
Economic Numbers are very well thought after but that should not burry your oversight and be buried in them
2 billion is only a house in india owned by Mukesh Ambani’s whose net worth is close to USD 22 Billion Dollars 20 more that Zambia’s debt
Surely Zambia has more landscape and resources than this house and that should motivate you and stop thinking you are done BUT be careful and investments debt or equity wisely in national resources to ensure you sustain and become self financing
Its like a yatch or a vehicle I have seen in slides in income inequalities and wealthy creation for…
But “Wal-Mart” subjects even part time employees to IQ test. That is the reason you did not got job with them.
I understand the national aggregates above and agree to be sound and think well to ensure supported sustained growth but in this case where its like a distressed issue I want to remind you that Zambia is bigger than an individual or corporate and we should not be scalped to think we need to relax and appear very desperate to commit another mistake simply to get a 2 billion Dollars even when the total industrial capitalisation of some of our sectorial companies net asset value is above that including some of our pension houses who could come together with other partners and buy in the opportunity in the rollover
I support the sustainability but not the desperation being created sometimes
you make a lot of mistake and commit to so many useless things that you realise not worthy it
And next time play Sovereign not Corporate Finance where you can unless you have quality cash flows generation to support that corporate flexibility
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To conclude my sharing here Zambia’s resources whether in debt or equity is an investments grade given the growth prospects and potential
See also the danger of certain financing methods One individual or corporate can yield some much influence and power either as a multinational or supranational in the Two billion Cond rum That is why its important not to be desperate in this 2 Billion and see Zambia’s great potential in resources and other whose present value in sinking provisos is way above 2 Billion
Remember one good wealthy individual be it a nation or corporate or sole individual can buy off But avoid the temptation to loose control and fall in the Debt Con”drum…
A little diversification will be helpful adding oil futures now could be another means of cover as prices are forecast to rise from current lows to near long term
Its not always that you hold to pay but investing to meet those payments as you sell what you bought effectively dealing with values and maturity over time in that flexibility
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Its very clear that PF will never liberate us youths from the shackles of poverty we are currently in.
Voting UPND into power is not the solution though.
So what do we do we the vibrant modern youths? Am advocating we form our own party of vibrant learned men and women from all corners of Zambia to tackle the countries problems with sober, sincere and intelligent minds.
The problem is people want to comment on things that they dont even understand. Firstly strategic planning doesnt mean that people planning must be there to enjoy the fruits of the plans but rather plans are made for the organisation (Zambia in this case). The plans being made today is for zambia and not for pf or whatever party. Secondly, planning doesnt mean that the govt has seen that they will fail to pay, they are formulating a strategy that will help them meet the oblgations without stress or panic.
That planning in “”Corporate Financial Markets”‘ for GRZ should be ACTIVELY MANAGED OR PASSIVELY or should mark to market measures as it where be a constant recheck to ensure we take advantage also.Should be until the HOLDER TO MATURITY”‘ even when an opportunity has arisen to manage and cash in in those yields and create some space 2022 is a very long time for prices to move and certainly not in our favour A debt holder with flexibility taking advantage of the options in the covenants makes the grade and china is most favourable to offload that burden and ensure future is promising as yields to maturity then will be very aggressive as most debt tenures will in come to…
maturity for most profile in that cater gory Liquidity will be an issue
Remember most terms will come near that period Simply check the profile o most sovereigns debt that was promoted to be the new wave in infrastructural projects and other forms
You will observe its between 2010 t0 2030 and slightly in maturity and very few apart from china will be willing to come to market especially with performance of the Sovereigns experiments that has waned since then
You rarely here about Huge Sovereign bonds these days attracting that attention
Now is the opportunity to plan and execute that strategy given low quality savings in developed projects
Finally ////
Petro bras of Brazil recently tapped in the massive $700 Billion dollars Bond buying programme so was Russia and Argentina before the window is closed
Check also your Barclays Capital US aggregate Bond Index and narrow to the sovereign sector and see the yields and tenure that provides that indication Notice the change and forecast 2030 Reconfirm with the US Corporate in the Morningstar and see the implications
Observe also that those dealers trade from inventories that they have held creating liquidity accordingly for second time It must be an issue looking at the ratings of the Bonds and direction The costs could be higher to pump up the bonds
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