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Zambia becomes First African Country to Ask Bondholders for Pandemic Relief

The southern African nation asked for meetings on October 20 with the holders of three Eurobonds totalling $3bn to seek consent for a standstill until April 2021, to create “breathing space” as it plans a debt restructuring. Zambia’s $1bn notes due 2024 fell more than 5% in London to 52.12c on the dollar, after the government said a coupon payment due October 14 would be included in the proposed suspension. The pandemic has worsened Zambia’s finances, which were already straining after years of overspending funded in part by external borrowing. The currency of Africa’s second-biggest copper producer is the world’s worst performer in 2020, making external debt payments even more costly after foreign reserves slid to record lows. The government said it hopes its restructuring plans will win support from the International Monetary Fund (IMF). Under Zambia’s proposal, it will pay bondholders $0.50 per $1,000 in bond principal they hold if the coupon-payment suspensions are approved.