Zambia Secures 97.85% Bondholder Approval for Debt-for-Energy Plan

Zambia has secured nearly full bondholder support for a $1.36 billion debt buyback deal aimed at reducing debt and funding electricity grid upgrades. The agreement will use a $600 million African Development Bank loan to repurchase a high-interest bond, while committing up to $275 million over 15 years to energy sector improvements. About 97.85% of bondholders have approved the deal, which is part of Zambia’s ongoing debt restructuring after its COVID-era default.

Zambia’s government says it has secured near-unanimous support from bondholders for a $1.36 billion debt buyback arrangement aimed at easing the country’s debt burden while directing funds toward long-term infrastructure development, particularly in the energy sector.
Under the deal, the government plans to use a $600 million loan from the African Development Bank, alongside domestic resources, to repurchase a sovereign bond maturing in 2053 that carries higher interest costs. Officials say the move is part of broader fiscal reforms designed to stabilise public finances following Zambia’s debt default in the aftermath of the COVID-19 pandemic.
In return for bondholder participation, the government has committed to investing up to $275 million over 15 years to upgrade and modernise the country’s electricity transmission and distribution network. Authorities describe the arrangement as the world’s first “debt-for-development swap” specifically targeted at the energy sector, linking debt restructuring directly with development outcomes.
Last week, Zambia offered an additional $65 million incentive to encourage bondholders to approve the deal. In a statement released on Wednesday, the government confirmed that investors holding 97.85% of the bond’s outstanding principal have now formally tendered their notes, effectively securing overwhelming backing for the transaction.
Zambia has been engaged in debt restructuring negotiations for more than two years as it works to restore economic stability and rebuild investor confidence. While progress has been made, significant challenges remain, particularly in expanding access to basic services.
According to the latest data from the national statistics agency, nearly half of Zambia’s population of about 22 million people still lacks access to electricity, underscoring the importance of investment in the power sector as part of the country’s long-term development strategy.