The Zambian government has quadrupled the limit on local-currency bonds that foreign investors can purchase, a move that could reduce refinancing risks, as approximately US$1.16 billion in debt payments fall due this year.
The Bank of Zambia raised the cap on non-residents’ participation in the government’s planned annual bond issuance to 23%, according to a statement to commercial creditors seen by Bloomberg and confirmed by the central bank. The previous limit was 5%.
Africa’s second-largest copper producer is facing higher debt payments to foreign holders this year, totaling about US$1.16 billion in maturities, coupons and discount payments, according to data from the Ministry of Finance.
Non-residents held about 30% of outstanding Treasury bonds in September, or roughly US$3 billion.
The increase in the limit — effective this month — gives foreign investors room to roll over holdings maturing this year by reinvesting in government bonds, easing refinancing pressures. It may also limit currency risks by reducing the need for investors to exit and convert proceeds into dollars.
Zambia introduced the limit in 2023 while restructuring its external debt, after becoming the first country on the continent to default (fail to meet agreed debt repayment deadlines) during the pandemic era. The government excluded local-currency bonds from the restructuring, a move that, according to Bloomberg, drew objections from China at the time.
Source: Bloomberg
