Zambia’s debt worrying UK investors, says British envoy

British High Commissioner to Zambia Fergus Cochrane-Dyet says UK investors’ number one concern is the country’s public debt situation.

According to brief remarks posted on the British envoy’s Twitter feed, High Commissioner Cochrane-Dyet stated that UK investors’ number one concern was the country’s public debt situation, and how the Zambian government intended to dismantle it.

Zambia’s external debt position has rapidly leaped to US $8.7 billion by the end of last year, up from US $6.9 billion by December 31, 2016, while domestic debt has ballooned to K50.9 billion as at March 31, 2018, compared to K38.6 billion in May last year, according to official Ministry of Finance data.

“In London meeting UK investors. Their No 1 concern about #Zambia? The debt situation: precisely how much & how #Zambian Govt will tackle it,” High Commissioner Cochrane-Dyet wrote on his Twitter page, Tuesday.

Zambia’s two Eurobonds issued in 2012 and 2014, worth US $750 million and US $1 billion, mature in 2022 and 2024 respectively.

The Zambian government is expected to make two bullet payments of the US $750 million in one single day in 2022, while also needing to repay the entire US $1 billion in another single day in 2024.

The third Eurobond issued in 2015 worth US $1.25 billion has a different structure and amortises in three equal instalments in 2025-2027.

Consequently, yields on Zambia’s 2027 Eurobonds have risen to 10 per cent for the first time in almost 18 months, exacerbating the pain for holders, with losses of 11 per cent this year.

Zambia’s dollar securities are the worst-performing in the Bloomberg Barclays Emerging Markets USD Sovereign Bond Index, which includes more than 70 countries, according to Bloomberg.

And according to renowned economist, Chibamba Kanyama, the rise in yields to 10 per cent is a sign that Zambia’s economy has caused anxiety among investors.




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