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Zambia has made a key step marking the beginning of formal talks to restructure over US$3 billion of international bonds after entering non-disclosure agreements (NDA) with its overseas bondholders.
Reuters reports that this is according to sources who confirmed the development that took place on Wednesday.
It is the first time bondholders have signed NDAs, which restrict them temporarily from trading the notes in exchange for non-public information, since Zambia’s 2020 default.
The creditor group, advised by Newstate Partners and Weil, Gotshal & Manges, consists of 15 European and United States-based institutions, holding in aggregate around 45 percent of Zambia’s Eurobonds.
Zambia has three outstanding dollar bonds maturing in 2022, 2024 and 2027, trading at 52-57 cents on the dollar.
The government is expected to share with some of its biggest international bondholders – members of the creditor committee – detailed information that will form the basis of debt restructuring talks as early as Wednesday, said the sources with direct knowledge, who asked not to be identified because talks are private.
Read more: Zambia, Creditors finally reach debt treatment deal, paves way for $188 million IMF disbursement
The move comes after Zambia, clinched a deal with bilateral creditors such as China and the Paris Club to rework about US$6.3 billion of debt in June, sending a signal that other pending national debt restructurings such as Ghana and Sri Lanka could also move forward.
“We first need to see Zambia’s updated macroeconomic package, which is in part why we have to get restricted,” one of Reuters sources said.
“There will be a restriction period of two weeks, with the option to extend it if both sides agree,” two other sources added.
First published: Exclusive: Zambia, bondholders advance $3 bln debt restructuring talks – sources
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