Zambia blames creditors after Africa’s first pandemic-era default

Zambia’s finance minister said creditors were at least partly to blame for the country defaulting on one of its eurobonds last week, while a group of bondholders said the missed payment risked setting a more adversarial backdrop for debt negotiations.

The southern African nation became the continent’s first pandemic-era sovereign default, after holders of the debt refused to grant it a six-month interest payment freeze on Friday.

The bondholders demanded more information on Zambia’s debts to Chinese lenders, but would not sign the necessary confidentiality agreements, Bwalya Ng’andu said.

Zambia missed a $42.5m (£32.3m) interest payment on $1bn worth of eurobonds maturing in 2024. The default was unavoidable because the country, which had received some debt relief from the China Development Bank, had to treat all creditors equally and had already built up arrears on other loans, Mr Ng’andu said.

The country’s $1bn in eurobonds, due 2024, fell 1.8pc to 44 cents on the dollar in London. The non-payment has triggered cross-default provisions in all the outstanding dollar bonds.

The bondholders committee, whose 15 members represent in aggregate more than 40pc of Zambia’s $3bn in outstanding Eurobonds, said on Monday that investors had been unable to consent to a debt standstill because they never received information they needed for an informed decision.

That includes details on Zambia’s “policy trajectory” and fiscal framework, and transparency on how the government intends to deal with other creditors.

There had been no direct discussions between bondholders and the authorities to date, the committee said.