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Zambia pushes to defer dollar-bond interest payments until April 2021

Credit: REUTERS/Stringer .

Zambia launched a vote with its Eurobond holders on Tuesday, proposing to defer interest payments on its three outstanding dollar-denominated bonds until April 14, 2021.

Adds detail, background, bonds

LONDON, Sept 22 (Reuters) - Zambia launched a vote with its Eurobond holders on Tuesday, proposing to defer interest payments on its three outstanding dollar-denominated bonds until April 14, 2021.

One of the world's largest copper producers, Zambia had been wrestling with growing public debt before a coronavirus outbreak forced lockdowns across the globe and quashed demand for raw materials.

"The proposal is intended as a first step to provide the issuer and its advisors the necessary breathing time to finalise the debt sustainability analysis and to define the parameters of a debt restructuring strategy aimed at putting the debt on a sustainable trajectory, which is a pre-condition to IMF lending," the government said in a statement.

Zambia has $3 billion of Eurobonds outstanding and owes $2 billion to commercial banks, $2 billion to the International Monetary Fund and World Bank and another $3 billion to China.

The statement said Zambia had engaged with the IMF in recent months and was working in "close coordination" with the fund to establish strategies required to return its debt to a sustainable path.

The country's dollar bonds suffered sharp declines, with the 2022, 2024 and 2027 issues ZM082877959=, ZM105638671=, ZM126708157= all down nearly 3 cents in the dollar to trade around 53 cents in the dollar.

Zambia said it would conduct a call with investors on Sept. 29 to discuss the plan and set a deadline for the vote on its proposal set for Oct. 16.

(Reporting by Karin Strohecker; Editing by Marc Jones and Alex Richardson)

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

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