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Eurobond holders form committee to engage govt

ZAMBIA’S Eurobond holders have formed a committee that seeks to engage the country on her current debt status.

Between 2012 and 2016, the PF government issued bonds at the international market that were oversubscribed to a tune of US $3 billion.

And on September 20, 2022, the first Eurobond will mature and the government will be required to settle its principal payment of $750 million in full. Twenty months later in April 2024, the government will have to settle the second Eurobond amounting to $1 billion.

The third $1.25 billion Eurobond will be paid back in three instalments in July of 2025, 2026 and 2027.

With less than two years before the first Eurobond matures, there is no clear indication of how and where the money to pay back will come from.

According to a statement released Tuesday, the committee’s formation is a response to the Zambian government’s announcement recently that it had engaged financial advisors to help manage its high eternal debt.

The Zambia External Bondholder Committee is, “a representative group of institutional holders of the outstanding Eurodollar bonds issued by the government of Zambia (‘Zambia’) has come together to form a bondholder committee (the ‘Committee’) in response to the announcement by Zambia that it has appointed financial advisors to assist in a liability management exercise of the country’s external debt,” the statement reads in part. “The Committee has organised to engage with Zambia with regard to its present situation, to facilitate communication among creditors, and to pursue any appropriate actions. The committee consists of ten international financial institutions based in the US and Europe and in aggregate holds approximately 35 per cent of the total amount of Zambia’s outstanding Eurodollar bonds. The committee is in close contact with other holders representing an additional 30 per cent of Zambia’s outstanding Eurobonds.”

The statement further states that many of the holders are also significant investors in the Zambian domestic government bond market.

“The Committee believes that any future interactions with Zambia should be conducted in a manner consistent with the G20-endorsed Principles for Stable Capital Flows and Fair Debt Restructuring, which include transparency and timely flow of information, open dialogue, good faith actions, and fair treatment among creditor classes. The committee has appointed Newstate Partners LLP as its financial advisors,’’ reads the statement.

Zambia engaged Lazard Freres of France on a $5 million three-year contract to advise government on debt restructuring. Zambia’s external debt is believed to be around $11 billion.

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