Amb Emmanuel Mwamba writes:
Eurobond Holders Reject Zambia’s Buy-back Move
Markets
Zambia Creditor Group Challenges $1.36 Billion Bond Buyback
By Constantine Courcoulas and Matthew Hill
June 1, 2026 at 10:22 AM GMT+2
A group of holders of Zambia’s dollar bonds maturing 2053 is opposing the government’s tender to buy back the securities, saying it was conducted without negotiation and would harm investors’ interests.
The ad hoc group’s lawyers said in a statement issued Friday that the creditors considered the terms of the tender offer for the $1.36 billion bond “materially adverse” to the interest of noteholders. They warned that if 75% of the notes are tendered, it would trigger a so-called clean-up call provision, allowing Zambia to
redeem all remaining bonds and block holders from any future upside, including a looming coupon step-up.
By Monday afternoon, the group had amassed support from holders of more than 25% of the outstanding notes, according to a person familiar with the matter who asked not to be identified because the matter is private.
The creditors are being advised law firm Cleary Gottlieb Steen & Hamilton, which urged other noteholders to contact it was in order to co-ordinate a response.
The bonds were issued as part of a debt restructuring completed in 2024 following Zambia’s default four years earlier when the Covid pandemic hit. The notes carry a step-up clause, specifying that coupons rise to 7.5% from 0.5% if Zambia meets an International Monetary Fund debt-sustainability metric for two consecutive periods — the first of which it’s
expected to hit in June.
Buying back the securities before the step-up trigger could help reduce the government’s future payments. Before the tender offer, Zambia was due to make a $2.5 million coupon payment next month.
Under the tender, it’s offering $780 per $1,000 of principal for bonds that are tendered by June 5, and $740 to participants who sign up after that date. Barclays Plc analysts Michael Kafe and Andreas Kolbe described the offer as a “fair-value opportunity” to take profits.
But some bondholders disagree. Hugo Verdiere, a fund manager at Degroof Petercam Asset Management in Brussels says he won’t tender his bonds.
“We believe that the fair value of those bonds is materially higher than what they are offering,” Verdiere said by phone. “One indicator is the fact that they are trying to tender them — actually, it
probably means that the authorities have the same view.”
Read: Zambia Bonds Jump After 2053 Debt Buyback Tender Starts
If the step-up trigger were to materialize, that would make the bonds more valuable, as they would then amortize by 2035 rather than 2053. Verdiere sees the tender offer as a sign that Zambia believes such a scenario will occur by December.
“We cannot know for sure, but the probability is high,” he said by phone. “That’s also why they are trying to call it.”
He said it’s unlikely that Zambia will meet the 75% threshold that would allow authorities to force the remaining holders to tender.
Debt-for-Energy
The government has secured a $600 million loan from the African Development Bank to fund the
repurchase, and will rely on its own resources for the rest.
The deal is a debt-for-energy swap, where the government has committed to investing future debt savings in the national power grid.
The deal is the first of its kind for AfDB, and will serve as a blueprint for similar initiatives across the Africa, the nation’s finance ministry said in a statement at the weekend.
The buyback will mark the successful conclusion of Zambia’s debt restructuring that began with a default in 2020, and will will pave the way for future market access “in the best possible conditions,” it said.
The bonds extended gains on Monday, adding another 1.5 cents to trade at 81.4 cents on the dollar by 2.40 p.m. in London.
The notes had traded below 74 cents last week ahead of the Friday’s buyback announcement.