Zambia blames creditors after first default in Africa during pandemic Business

Zambia’s finance minister said creditors were at least partly responsible for the country’s default on one of its Eurobonds last week, while a group of bondholders said the non-payment risked creating a more adversarial context for the debt negotiations.

The southern African country became the continent’s first sovereign default during the time of the pandemic, after debt holders refused to grant it a six-month interest payment freeze on Friday.

The bondholders asked for more information about Zambia’s debts to Chinese lenders, but failed to sign the necessary confidentiality agreements, Bwalya Ng’andu said.

Zambia missed an interest payment of $ 42.5 million (£ 32.3 million) on $ 1 billion Eurobonds maturing in 2024. The default was inevitable as the country, which had received debt relief from the Development Bank of China, had to treat all creditors equally and already accumulated arrears on other loans, Ng’andu said.

The country’s billion dollar Eurobonds, due 2024, fell 1.8% to 44 cents on the dollar in London. The non-payment triggered cross-default provisions in all outstanding dollar bonds.

The bondholders’ committee, whose 15 members together represent more than 40% of Zambia’s $ 3 billion Eurobonds in circulation, said on Monday that investors had not been able to agree to a debt status quo because they had never received the information they needed for an informed decision.

This includes details on Zambia’s “political trajectory” and fiscal framework, as well as transparency on how the government intends to deal with other creditors.

There have been no direct discussions between bondholders and authorities to date, the committee said.