The Zambian government has asked banks for proposals on reorganizing as much as $11.2 billion of foreign debt as its debt-service costs rise and metal prices plunge, hurting its economy.
The country “intends to implement a liability management of its external debt portfolio to lengthen maturity and enhance its capacity to meet debt-service obligations,” the finance ministry said in a request for proposals sent to lenders, seen by Bloomberg and verified by two of the recipients.
The advisers’ mandate would include assisting the government in negotiations with creditors, as well as “formulating restructuring plans for loans” where creditors agree, according to the document.
The request for proposals is part of Zambia’s plan to put in place measures to ensure debt sustainability and deal with liabilities that will become due in the medium term, Finance Ministry Spokesman Chileshe Kandeta said in an emailed response to questions.
“The government has no intention of unilaterally restructuring its debt without consulting creditors,” Kandeta said. “The government will respect agreements and use market-based instruments where applicable.”
The document was sent to lenders including Barclays Plc, Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc.
The ministry also sent it to Greylock Capital Management LLC, an investor in emerging-market distressed debt.
Any restructuring plan will include debt held by multilateral and bilateral lenders, commercial banks, capital-market investors export-credit organizations and others, the document said.
Zambia’s foreign debt amounted to $11.2 billion at the end of 2019.
Zambia’s currency is the world’s worst performer after Brazil’s this year, and foreign-exchange reserves have fallen to a record low and cover less than two months of imports.
Its $3 billion of Eurobonds have been trading at distressed levels, with yields on notes due 2022 rising above 50%. The bonds extended losses Tuesday.
The selected advisers will “review the entire debt-loan portfolio to identify loans that are plausible for liability management,” according to the request for proposals. They will also “formulate restructuring plans for loans where liability management terms have been agreed to by creditors,” and help arrange financing, it said.
Zambia debuted in the Eurobond market in 2012, when low interest rates in the wake of the global recession and the ensuing hunt for yield among investors meant it could borrow more cheaply than Spain at the time.
Two other Eurobond sales followed in 2014 and 2015.
It’s also contracted billions of dollars in loans for infrastructure projects from lenders including Export-Import Bank of China, Industrial and Commercial Bank of China and Saudi Fund for Development.
According to experts, it could take up to 3 years for the US and European economies to recover from the impact of the Covid-19 coronavirus crisis. How much more African economies? We have to be tough. Very, very tough.
It’s hard times calling for desperate measures. Nothing will hold in its original forms now, reforms, alterations, adjustments in quality and quantity are inevitable. My wallet is already in economic downturn – every one else will follow suit, its a matter of time.
I remember Miles Sampa dancing in New York when Zambia got the Euro Bond…. fast forward nothing to show for it and in deep SH.IT
Oh dear, wasn’t it only last yr whn Margaret Mwanakatwe was saying all was well and was going to end well, adding that she had Mukula wood if push came to shove? Expertise within Zambia is available but this expertise doesn’t hv access to loan agreements.
Borrowing is not bad! So they said, and everyone complaining is bitter.
Well we told you it was unsustainable to borrow at that rate and your response was “Sonta Epo Wabomba” now you have also eaten all the reserves for a rainy day that MMD built up…today you are asking for extension.
Nine Chale – When it suits you…you make comparisons with the West, the western countries have worked hard to maintain good credit rating and can afford to borrow where as you have borrowed for building over priced works like Ndola-Lusaka Motorway to name a few.
Lol, the banks will ask for loan agreements. It’s time to own up.
We told you lazy PF and Lungu were praying for Covid-19…if they can risk 50 deaths due to gassing where no tangible arrests have been done what more a disease to use as an excuse for non payment of loans they have eaten.
It’s happening everywhere as we enter a global recession. Only dull people will blame the pf. This is why they can never win elections. Lack of maturity in analysing simple things.
We told you lazy PF and Lungu were praying for Covid-19…if they can risk 50 deaths due to gas.sing where no tangible arrests have been done what more a disease to use as an excuse for non payment of loans they have eaten.
MMD left reserves and a good credit rating in 2011 …what is in the reserves today 2020 and what is the credit rating and loans accrued this they left? Only a cretin would blame anyone else but PF.
This is almost suicidal. Where’s Zambia’s proposal to the banks?
Call Alexander Chikwanda. He knows wht he was committing Zambia to.
Please for F@ck’s sake iwe Kainyo Zulu shut your god damn ignorant mouth up! The PF’s blind reckless borrowing had only one end, economic crash! Chikwanda and all his Muchinga baboons need to be shot dead!
The bankers in Frankfurt, London, New York and Tokyo are laughing out loud. They don’t run Zambia’s economy and they think in dollars. Where do they start from? Zambia has to table a proposal which they can in turn consider. Goodness, gracious me.
What is the dance that goes with this proposal?
Quite often in Zambia, whn some people are working hard to ensure that public finances are sound, govt is paying its bills on time, refraining from too good to be true contracts and making sure govt gets value for money from those it contracts wth, such efforts are never appreciated by those whose businesses start doing well, going to the stock market to become public companies and declaring dividends. Private individuals begin to acquire real property and buying new vehicles. Now they hv come to know hw hard it is to run a business without good stewardship of public finances. We hv reached this stage.
Agony, is reading a comment from an elderly person with an empty head, while smart youth are commenting with objectivity and logic, an empty head spoils a a discourse with an *****ic and nonsensical comment.
Whichever the PF dunderheads try to spins this bad news for the country, Me thinks this will not end well for PF
Where’s money from public officials’ salaries we were told were cut and difference paid to cushion the indigent? We were told publicly, weren’t we?
First of all the banks named hv to be engaged as advisors to the Zambian govt and they won’t do that for free. Hv the banks been engaged? Hw much is it costing us for them to even look at our as yet non-existent proposal?
This is what HH has all along been saying. We shall wait for Sunday Chanda to tell us this Fake News.0
I remember someone sad we won’t eat roads and we Zambians were so excited with the unnecessary township roads, we laughed this person off
Now finally realization is hitting you that time to pay is near and you are stuck. Now this is when you are asking for advice when it’s too late.
Money
For sure this won’t end well for PF. PF seems to be dry of ideas now. Doesn’t the dictaor have advisors in form of miniters, PSs and other civil servants. Why engage banks to advisors at this late hour. When UPND tried to advise, they were called names – bitter, bantustan etc. Now the chickens have come home to roost. Bye bye PF.