by Rachel Savage
LONDON (Reuters) – Zambia’s international bondholders have criticized the IMF’s debt restructuring framework as “arbitrary”, and exclude the country’s domestic debt, sources involved in the process
Zambia has defaulted for nearly two years and an IMF debt sustainability analysis released last week called for its repayment Debt-to-export ratio drops to 140% “threshold” from 153% to 84% fast through .
“Now, all of a sudden, they have an arbitrary 84% number,” Abrdn Emerging Markets Debt chief Kevin Daly said he chairs a committee of bondholders and holds an estimated 45% of Zambia’s $3 billion worth of international market debt.
“How did you come to this number? It’s very different from the threshold of (140%),” he told Reuters, calling for The IMF met with bondholders who complained of being excluded and the IMF and bilateral creditors worked out a plan.
An IMF spokesman did not immediately respond to a request for comment.
Zambia’s long-delayed debt restructuring Analysts are using it as a test case for the expected mass defaults in poorer countries not only in capital markets but also from countries including China countries including large borrowings.
David Malpass, president of the World Bank, the IMF’s sister organization, said last week that “the net present value (NPV) terms…are essential.”
Creditors, including Chinese lenders, “will not accept relief of this magnitude,” Daly said.
He declined to say what other bondholders would agree to, but said from his perspective, “If it were in… 11 -45% range, which I think is acceptable.”
Bond Recovery Value $30 to $12, the exit yield is 11-% is “realistic,”” he said.
Bondholders are also $ A second source involved in the restructuring said that $600 million in local currency debt, of which $3.2 billion was owned by foreign investors, was excluded from the restructuring.
A person familiar with the committee’s position but speaking on the condition of anonymity, said it meant that such debts would effectively take precedence over those affected by Eurobonds governed by international law.
He also questioned whether it was correct to include local currency debt not subject to debt-target restructuring, as it “squeezed the amount of debt service available to repay foreign debt.” “However, he said bondholders are “attention” that restructuring local currency debt could cause problems for Zambia’s banking sector.
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