Zambia bondholders reach agreement to restructure three series of bonds

By Mary-Katherine Stinson

Lexington, Ky., Oct. 26 – An external bondholder steering committee reached an agreement-in-principle with the government of Zambia on a restructuring of three series of its eurobonds, according to a press release.

The agreement pertains to Zambia’s $750 million 5 3/8% notes due 2022, $1 billion 8˝% notes due 2024 and $1.25 billion 8.97% amortizing notes due 2027.

The committee believes the proposed agreement will give the government significant cash flow and debt stock relief to support a restoration of macro-economic and debt sustainability in the context of the International Monetary Fund-financed program and cure the long-standing default on the eurobonds.

The proposed restructuring terms provide both substantial up-front debt relief and future relief corresponding to Zambia’s economic progress in the next few years, with enhanced repayment terms and higher coupons on one of the two new eurobonds to be issued if Zambia’s debt carrying capacity, as assessed by the IMF and World Bank’s Composite Indicator, moves to medium from weak or Zambia continues to meet or exceed current IMF projections as measured by exports of goods and services and fiscal revenues measured in dollars, the committee said in the release.

This approach is consistent with the agreement recently reached with Zambia’s official creditor committee.

Implementation of the agreement-in-principle is conditional on mutual agreement on deal documentation, with the goal of full implementation before year-end.

Members of the committee include the following asset managers: Amia Capital LLP; Amundi (UK) Ltd.; RBC BlueBay Asset Management; Farallon Capital Management, LLC; and Greylock Capital Management, LLC, all acting either directly or on behalf of funds or other accounts they manage.

The creditor committee is being advised by Newstate Partners and Weil Gotshal & Manges (London) LLP.

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