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Alba Iulia
Monday, April 19, 2021

Fitch Ratings Agency Upgrades Zambia from “CC” grade to “CCC”,

Economy Fitch Ratings Agency Upgrades Zambia from "CC" grade to "CCC",

Fitch Ratings has upgraded Zambia’s Long-term Local-Currency (LTLC) Issuer Default Rating (IDR) to ‘CCC’ from ‘CC’ and has affirmed Zambia’s Long-Term Foreign-Currency (LTFC) IDR at ‘RD’.

KEY RATING DRIVERS

The upgrade of the LTLC IDR reflects that the government has continued to service its local currency debt and has made no indication that it plans to include domestic debt in any potential debt restructuring. This means an eventual re-structuring of external debt could improve the overall public finance position and support local-currency debt sustainability.

However, the ‘CCC’ rating still reflects a real possibility of a local-currency default, given Zambia’s weak public finances and tight domestic financing conditions. Fitch estimates the 2020 general government deficit widened to 12% of GDP and forecasts a 2021 deficit of 10.3%. General government debt reached an estimated 114% of GDP at end-2020, versus the current ‘B’ median of 66%. The need to roll over domestic debt has increased interest rates. The government’s weighted-average cost of domestic government bond issuance reached a real rate of 11.7% in February, when inflation was 22%.

Zambia’s LTFC IDR of ‘RD’ reflects that the government has not serviced its outstanding Eurobonds pending a restructuring since its failure to pay the coupon due 14 October 2020 on its USD1 billion Eurobond that matures in 2024. The government has continued to service foreign currency-denominated debt to multilateral financial institutions and debt on a few priority projects that have immediate social and economic impact.

The Government of Zambia officially requested debt treatment under the G20 Common Framework in February 2021, and began discussions with the IMF on a possible support programme. Debt treatment under the common framework is likely to be driven by the outcome of a debt sustainability analysis (DSA) prepared by the authorities with the IMF and the World Bank.

An IMF statement on 3 March noted broad agreement on the “nature and cause of macroeconomic imbalances,” but that key challenges remain in addressing those imbalances. Given that an IMF programme will require significant policy adjustments, we believe that final approval of a programme is unlikely before the 2021 general election that is currently scheduled for August.

ESG – Governance: Zambia has an ESG Relevance Score of 5 for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption, as is the case for all sovereigns. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model (SRM). Zambia has a medium WBGI, in the 38th percentile, reflecting a recent record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and a moderate level of corruption.

ESG – Creditor Rights: Zambia has an ESG Relevance Score (RS) of 5 for Creditor Rights as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. Zambia has not serviced its outstanding Eurobonds since its failure to pay the coupon due 14 October 2020 on its USD1 billion Eurobond that matures in 2024

Full Report: https://www.fitchratings.com/research/sovereigns/fitch-upgrades-zambia-lc-idr-to-ccc-affirms-fc-idr-at-rd-12-04-2021

https://www.fitchratings.com/research/sovereigns/fitch-upgrades-zambia-lc-idr-to-ccc-affirms-fc-idr-at-rd-12-04-2021

20 COMMENTS

  1. “Zambia has not serviced its outstanding Eurobonds since its failure to pay the coupon due 14 October 2020 on its USD1 billion Eurobond that matures in 2024”

    Let’s wait for empty tins to start celebrating and making a foooool out themselves …really laughable …the same fools who were rubbishing Fitch and other agencies. This is like your marks being upgraded to 55% from 50 % you still have a D.

    Meanwhile our Lazzy Lungu is busy with empowerment programs.

  2. We don’t believe in this imperial classification of African countries. It has no bearing on us. For us all we care about is how the man at the bottom is faring. We work for our people and that is what matters not some rating by some geeky boys sat at a desk.

    Thank you to my partners at Lusaka times for moderating another f00l above. Twalumba

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  3. “Zambia has not serviced its outstanding Eurobonds since its failure to pay the coupon due 14 October 2020 on its USD1 billion Eurobond that matures in 2024”
    Only a reckless individual who has corruptly acquired wealth wouldn’t understand the ramifications of defaulting or understand this article ….these are leaders who think people are doing well because Shoprite is busy

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  4. Today Zambia is promoted, upgraded with h a top notch. If it was downgraded, all unpatriotic minions would have flooded with the media with negative comments. Even so, they are shamed to the core. It is even better that the election year has received these accolades and praised from unsolicited sources.

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  5. Today Zambia is promoted, upgraded with a top notch. If it was downgraded, all unpatriotic minions would have flooded the media with negative comments. Even so, they are shamed to the core. It is even better that the election year has received these accolades and praises from unsolicited sources.

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  6. Kainyokolola Zulu, do you even understand the meaning of don’t imperial classification you f**cking mbeba munching *****!

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  7. These Fitch ratings make little difference as
    Donor countries continue giving aid even with all the ratings.These ratings should be
    Like a red card so countries should fear
    Accumulating debt .

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  8. That’s still a poor rating Zambia ,good credit rating should only be B and above.This new rating means Zambia’s economy is still in ICU.

  9. Meanwhile the cost of living is spiralling out of control.

    People are still being paid less than 1000 ZMW per month.

    There are also those that have become very rich too quickly and now they are making donations everywhere like they print money. Maybe they do print money.

  10. Of course KZ doesn’t believe Fitch, it’s HIS corrupt PF government that has brought the demise of the Zambian economy about! And you say you’re looking after people at the bottom? You mean those criminal stealing PF cadres? You wouldn’t recognize a true poor Zambian if you would stumble over one!

  11. The corrupt PF government will hail this as a major achievement. While going up from CC to CCC really means promotion from “absolute bottom” to “complete misery”. Surely something to be proud of…….

  12. Donor aid is usually fractions of a dollar from their tax base. This is why it is usually a consistent feature that governments will give aid and grants. When we realize that it is parliamentary allocation in rich countries to budget for AID, we will also realize that our surplus can actually be used to counter that debt. There are components of Dambisa Moyo’s argument that I do support. Certainly. We will run away from this constant fear of downgrades and nonsense once we synthesize this fact.

  13. Any positive news about Zambia is bad news for the upnd diasporan donkeys. Their ka god is in bed as he is down with shiki polomya following the recent defections in his tribal grouping. With such news, awe shuwa….

  14. UPND prides in Zambia’s disaster. Any strides made during Lungu’s reign mean nothing to them. This hate will consume you.
    Why must Zambia be Zambia only with HH atop? This is so immoral

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