Fitch downgrades Zambia

Fitch Ratings said it downgraded Zambia’s long-term foreign-currency issuer default rating to C from CC. Fitch also cut Zambia’s senior unsecured foreign-currency bonds in the consent solicitation to C from CC. This consists of all of the foreign-currency bonds rated by Fitch.

“The downgrade reflects Fitch’s view that a sovereign default will follow the consent solicitation issued by the Zambian government on suspending debt service payments on its three outstanding global bonds. A suspension in payments, if agreed to by bondholders, would constitute a distressed debt exchange (DDE) in Fitch’s view,” the agency said in a press release.

Authorities indicated they would continue to make debt service payments on outstanding eurobonds if an agreement is not reached, the agency said.

However, Fitch said it judges there is a high risk of a missed debt payment over the forecast horizon.

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