Zambia: Bleak reform prospects but potential upside for Eurobonds

  • Material reform and IMF program unlikely before August 2021 elections, but capex cuts can stabilise the debt burden

  • Short-term external debt service exceeds reserves, with cashflow relief necessary to ease liquidity constraints

  • Haircuts likely to be limited, though restructuring complicated by Chinese involvement. We initiate ‘Buy’ on Zambia 24s

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