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Zambia adjourns creditor meetings to defer Eurobond payments

Zambia's government said on Tuesday it had adjourned meetings with creditors on a proposal to defer payments on its Eurobonds to Nov. 13 due to a lack of quorum, pushing the copper producer further towards a protracted debt overhaul.

adds detail, bond prices, background

LONDON, Oct 20 (Reuters) - Zambia's government said on Tuesday it had adjourned meetings with creditors on a proposal to defer payments on its Eurobonds to Nov. 13 due to a lack of quorum, pushing the copper producer further towards a protracted debt overhaul.

The meetings had been scheduled for Tuesday morning and were expected to gauge support for a push to delay interest payments on three outstanding dollar-denominated bonds until April.

Two-thirds of holders of Zambia 2022 and 2024 bonds and three-quarters of its 2027 issue were required to vote.

The prospects for creditors agreeing to the government proposal had been slim. A group representing creditors which hold a blocking stake of Zambian Eurobonds already announced in late September that it would reject the government plan.

The prospect of a drawn out and messy restructuring has weighed on Zambia's bonds in recent weeks. Following Tuesday's announcement, the issues extended declines, trading as much as 0.7 cents lower to change hands between 42 and 46 cents in the dollar. US988895AA69=TE, XS1056386714=TE, XS1267081575=TE

Zambia already struggled with its mounting debt burden before the coronavirus pandemic roiled global markets.

The country's external public debt burden amounts to nearly $12 billion, with $3 billion of outstanding Eurobonds, $3.5 billion of bilateral debt, $2.9 billion of other commercial debt and $2.1 billion owed to multilaterals. Some $3 billion of its public debt is owed to China.

Last week, Zambia missed payment of a $42.5 million coupon on one of its Eurobonds that was due on Wednesday with a 30-day "grace period" kicking in. Rating agency Fitch said on Thursday it expected the country to default on government debt in the coming months.

(Reporting by Karin Strohecker; Editing by Tom Arnold and Alison Williams)

((karin.strohecker@thomsonreuters.com; +442075427262; Reuters Messaging: karin.strohecker.reuters.com@reuters.net))

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