LONDON/NEW YORK (Reuters) – Zambian foreign bondholders had signed non-disclosure agreements (NDAs) with the government as of Wednesday worth more than $3 billion, three sources said. It is an important step that marks the beginning of formal negotiations for restructuring. About international bonds.
The government plans to share detailed information on the basis of debt restructuring talks as early as Wednesday with some of the largest international bondholders who are members of the creditors’ committee, the sources said. Conversations are private.
The move comes after Zambia, Africa’s second-largest copper producer, reached an agreement in June with bilateral creditors including China and the Paris Club to roll back about $6.3 billion of debt. , hinting at other pending sovereign debt restructurings such as Ghana and Sri Lanka. Ranka could also move forward.
“First we need to see Zambia’s latest macroeconomic package, which is part of the reason why it has to be restricted,” said one of the sources.
There will be a two-week restriction period, with an option to extend it if both parties agree, the two sources added.
A spokeswoman for the creditors group did not immediately comment. Zambia’s Ministry of Finance did not respond to a request for comment.
Zambia has three dollar-denominated bonds maturing in 2022, 2024 and 2027, trading between 52 and 57 cents per dollar.
It will be the first time since Zambia’s 2020 default that bondholders have signed an NDA that temporarily restricts bond trading in exchange for non-public information.
Advised by Newstate Partners and Weil, Gotshal & Manges, the group of creditors comprises 15 institutions based in Europe and the US, collectively holding approximately 45% of Zambia’s Eurobonds.
Amia Capital, Amundi, BlueBay Asset Management, Farallon Capital Management, Greylock Capital and T. Rowe Price form the Steering Committee.
So far, initial discussions between private creditors and government officials have only been conducted between financial and legal advisers.
Discussions will focus on how to incorporate the impact of potential improvements in Zambia’s debt-bearing and debt-servicing capacity, in addition to reducing the net present value.
The agreement with official creditors includes accelerating loan repayments and increasing interest rates if Zambia’s capacity changes from its current “weak” to “moderate” following the joint International Monetary Fund and World Bank assessment in 2026. There is already a mechanism to pull it up.
Creditors are discussing how to incorporate so-called state conditional debt instruments that allow higher payments based on improvements in economic performance such as gross domestic product, budget and export earnings, a source said. are doing.
“The indicator needs to be related to debt-bearing capacity, but it cannot be a direct trigger because it would give the IMF and World Bank a veto,” the official said. added.
of IMF and World Bank assessment It examines real economic growth rate, reserves import range, and remittances, among other factors.
Creditors are discussing a mechanism to revisit payments by raising coupons, shortening debt maturities, or a combination of both, without changing capital payments, one of the people said.
The IMF Executive Board will meet on Thursday to complete the initial review of the country’s $1.3 billion Expansion Fund Facility (EFF) program. After the review is complete, the country will have access to about $188 million.
Reporting by Giorgelina de Rosario from London and Rodrigo Campos from New York.Editing: Karin Strohecker, Lincoln Feast, Conor Humphries
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