Zambia bondholders rejected a request by the country for a six-month delay in interest payments, which represents about $120 million of coupons, according to regulatory filings.
Consent had been requested from holders of Zambia’s dollar-denominated 5.375% notes due 2022, 8.500% notes due 2024, 8.970% notes due 2027
Zambia also faces the expiry of a 30-day grace period today, after skipping an interest payment on $1 billion of bonds due 2024 at the end of October
Zambia will be in technical default if it doesn’t pay the coupon by the end of today.
In a statement, Ministry of Finance confirmed that the Extraordinary Resolutions set out in the notices of the adjourned meeting of Zambia’s Eurobond holders dated 20th October 2020, which was subsequently held today, 13th November 2020, were not passed.
It added, “Accordingly, the modifications and waivers, including the deferral of interest payments due on each of the bonds during the period from 14th October 2020 until 14th April 2021, requested by Zambia will not be implemented.”
“While Government regrets that the bondholders did not approve the requests made by Zambia in good faith, we remain committed to finding a consensual and collaborative resolution to debt sustainability issues.”
“In light of the fiscal and economic challenges the country faces, Zambia will continue to engage in constructive dialogue and share information with the ad hoc committee of bondholders and all other creditors in order to agree a resolution that would gather support from all its creditors.”
It said Zambia also remains resolute to adhere to the principle of transparency in its engagements with the creditors.
“Further, we are confident that as Government continues to share information with all creditors, including the committee’s advisors, there will be an appreciation that agreeing to consensual standstills or accruing arrears are the only options available to the country while we design a plan to put our debt on a sustainable trajectory.”
And Economist Chibamba Kanyama says the outcome was anticipated.
And Respected Economist Chibamba Kanyama has that this is not surprising as it was anticipated.
“The question now is: will government pay the due amount or default?”
Mr Kanyama said Minister of Finance Bwalya Ngandu’s statement is not clear on the matter.
“However, put in context, and based on the Veep response in parliament today, the government will not default. It is in the interest of every citizen that the government pays and we should support that move,” Mr. Kanyama.