Zambia's World-Beating Bonds Show Investors Back Hichilema

The world-beating rally in Zambia's bonds is likely to extend if President Hakainde Hichilema decisively wins next month's elections, according to Citigroup.

The kwacha-denominated bonds have delivered a 36% dollar return so far this year, the best of any emerging market tracked by Bloomberg, far ahead of the wider field where an index of local debt has returned just 1.35%. Citi expects a clear win for Hichilema to draw foreign investors back to the government bond auction scheduled soon after the 13 August vote, which would push borrowing costs lower still.

That confidence rests on the President's economic record. Investors have welcomed his reforms throughout his first term, and the numbers show it. At the 26 June auction, the government paid between 14.25% on its shortest-dated debt and 17.5% at the long end, with the closely watched 10-year rate down around 70 basis points since January.

The bond surge follows a copper-driven stock market boom that lifted the Lusaka index more than 110% in dollar terms last year. Money flowed into government debt after authorities eased the cap on foreign ownership in January, opening the door to more overseas buyers. A 20% rise in the kwacha this year, on top of a 25% gain in 2025, has boosted returns further. The currency traded at 18.44 per dollar on Wednesday, its strongest since late May.

The kwacha is expected to hold steady through the election period, and a stable currency has historically tended to favour the incumbent at the ballot box.