Citi Upgrades Zambia Bonds, Citing Post-Election Stability

Citi has upgraded Zambia's international bonds to "overweight" and signalled its intention to buy local government debt, pointing to the political stability that has followed President Hakainde Hichilema's re-election.

The bank said it expects to be a buyer of the seven-year local-currency bond at Friday's auction, the first debt sale since Mr Hichilema was declared the winner of last week's election with about 60 percent of the vote. Citi anticipates strong demand, noting that liquidity in the financial system currently exceeds the volume of bonds on offer.

In a further vote of confidence, the bank raised its stance on Zambia's international bonds to overweight from marketweight. Citi suggested that the improving political outlook could pave the way for ratings upgrades, with Moody's potentially lifting Zambia from its Caa2 rating, and S&P possibly raising it to B-minus in 2027, provided the government maintains its programme of fiscal consolidation.

The bank noted that Zambia does not intend to return to international markets for borrowing until it agrees a new programme with the International Monetary Fund, which Citi expects to be concluded before the end of the year.

Citi did, however, flag risks to its position. Chief among them are the possibility of political unrest in the wake of the disputed election, as well as the potential economic impact of an El Niño weather event expected in early 2027.

The assessment underlines growing investor confidence in Zambia's economic direction as the country enters a new political cycle.