Zambia Comprehensive Comeback Belatedly Blesses Debt Framework

Summary

The episode reviews Zambia's overdue debt restructuring progress, highlighting a post‑default €3 billion Eurobond swap that now accounts for about a quarter of its external debt and a 95% debt‑to‑GDP ratio. It notes strong market rebounds with the kwacha up 15% and local bond and equity indices rising 20%, while external bond spreads have tightened to 500 bps and ratings have improved to C/B with a stable outlook. The central bank’s brief policy shift to mandate local‑currency transactions initially scared investors, but the subsequent increase in the domestic bond ownership ceiling to 25% spurred foreign participation, driving a 10‑year yield to 17.5% amid a benchmark rate cut to 14.25%. Overall, the discussion underscores Zambia’s fragile yet improving fiscal landscape and the delicate balance between policy moves and investor confidence.