Zambia is highly likely to default on its $3 billion Eurobonds after government adjourned meetings with creditors to November 13. The meeting scheduled for Tuesday 20 October was to propose to defer payments on its Eurobonds.
The November 13 meeting coincides with the day that Zambia may enter debt default unless it pays an overdue $1 billion on the 2024 Eurobond. Reuters reports that Zambia missed a $42.5 million payment that was due last week on Wednesday.
For the proposal to sail through, Zambia needed a quorum from the two-thirds holders of the 2022 and 2024 Eurobonds and three-quarters of the 2027 holders. However, a group of investors representing nearly 40 percent of the Eurobond avoided the voting route to give the Zambian government more time to engage with them.
Zambia got a relief last week under the debt service suspension initiative (DSSI) window facilitated by the G20. However, commercial creditors are reluctant to suspend the debt repayment citing Zambia’s unequal treatment to creditors.
Zambia’s Finance Minister Bwalya Ng’andu told Parliament that the Eurobond creditors were worried that should they provide the debt relief, Zambia would pay other debt services rather than channelling the funds towards COVID19 related expenditures. The finance minister said that Zambia’s external debt stood at $11.48 billion at the end of 2019.