Zambia Launches Buyback of $1.36bn 2053 Bond

Zambia has launched a cash tender offer to repurchase its $1.36 billion bond maturing in 2053, joining a growing list of African nations buying back debt to cut servicing costs. The government will fund the purchase through a $600 million loan from the African Development Bank alongside its own resources.

Holders are being offered $780 for every $1,000 of principal tendered by 5 June, falling to $740 per $1,000 for later participants. The bond responded strongly, climbing a record 5.9 cents to 79.6 cents on the dollar and ranking as the best-performing emerging-market sovereign dollar bond on Friday.

The timing is significant. Under Zambia's 2024 debt restructuring, coupons on the bond could jump from 0.5% to 7.5% if the country meets an IMF debt-sustainability measure, the composite indicator score, for two consecutive half-year periods. Analysts expect Zambia to hit the target in June, with December remaining uncertain. Standard Chartered's Samir Gadio said the tender could signal that the government sees a real possibility of meeting the threshold. Buying back the debt before any step-up is triggered could lower future borrowing costs.

The move reflects a wider trend, with Angola and the Republic of Congo recently funding buybacks through fresh bond sales. Zambia's position is being bolstered by rising copper prices, which are strengthening its external accounts. As the continent's second-largest copper producer, the country has seen the kwacha gain around 20% against the dollar this year, the strongest performance of any currency globally.