Africa-Press – Zambia. Zambia External Bondholder Steering Committee Reaches Agreement with Zambia on Debt Restructuring Here are the highlights;
✅The Zambian Government has reached and concluded the debt restructuring with Eurobond holders over the country’s 3.5 billion United States Dollars it owes.
✅The Zambia External Bondholder Steering Committee announced that it had reached a conclusive 2024 agreement with the Government of Zambia on a restructuring of the country’s:
(i) US$750,000,000 5.375 per cent. Notes due 2022,
(ii) US$1,000,000,000 8.500 per cent. Notes due 2024 and
(iii) US$1,250,000,000 8.970 per cent. Amortising Notes due 2027 (collectively known as the “Eurobonds”).
✅This agreement follows the Government’s confirmation that the terms of the 2024 Agreement are compatible with Zambia’s Official Creditor Committee assessment of comparability of treatment and the IMF’s program parameters under the Second Review framework.
✅Since November 2023 when the OCC determined that the previous agreement-in-principle (AIP) reached with the Government did not meet the requirements of the comparability of treatment provisions set out in the memorandum of understanding, the Committee has continued to support the Government’s efforts to pursue a restructuring on terms close to those of the November 2023.
✅While the 2024 Agreement provides some further debt relief beyond that provided for in the November 2023 AIP, these additional concessions will allow for the-standing default on the Eurobonds to be cured, will support the restoration of Zambia’s macro-economic and debt sustainability in the context of the IMF-financed program, and were required to ensure the support of all key stakeholders including the IMF and the OCC in a timely manner.
✅Prompt implementation of a debt restructuring agreement with bondholders is not only in Zambia’s interests, but the wider creditor community as a whole.
✅The proposed restructuring terms set out in the 2024 Agreement are based on the same structure as the November 2023 AIP.
✅Two new Eurobonds will be issued which provide future debt relief commensurate with Zambia’s economic progress in the next few years.
✅While the 2024 Agreement requires both additional debt reduction and net present value relief compared to the restructuring terms agreed pursuant to the November 2023 AIP, it also includes enhanced repayment terms and higher coupons on Bond B, in the event that 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 exceeds current IMF projections as measured by exports of goods, services and fiscal revenues measured in US Dollars.
✅The 2024 Agreement also includes agreement on certain non-financial terms, including a most favoured creditor clause that will ensure that certain other creditors do not receive a better recovery in the restructuring on net present value terms, a loss reinstatement clause if Zambia were to default during the term of the IMF program, and certain ongoing information covenants for Zambia.
✅The Committee appreciates the collaborative and transparent discussions with the Government that have allowed for this conclusive agreement to be reached.
✅The Committee encourages all holders of the Eurobonds to carefully consider the terms of the Government’s prospective offer in relation to the 2024 Agreement and to make their own independent appraisal of the merits and risks of participation.
✅Members of the Committee include the following asset managers (acting either directly or on behalf of funds or other accounts they manage): Amia Capital LLP; Amundi (UK) Limited; Farallon Capital Management, LLC; Greylock Capital Management, LLC; RBC BlueBay Asset Management.
✅The Creditor Committee is being advised by Newstate Partners and Weil Gotshal & Manges (London) LLP.
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