Zambia Chooses Lazard as Financial Adviser for Debt Restructure

LUSAKA (Capital Markets in Africa) — Zambia appointed Lazard Freres as financial adviser to help it restructure its external debt, the Finance Ministry said.

The contract is worth $5 million and will last three years, the ministry said in a statement on Wednesday.

“The government has no intention of unilaterally restructuring debt without consulting creditors,” Treasury Secretary Fredson Yamba said in the statement. “We will respect agreements and diligently use market-based instruments in our debt management.”

Zambia asked for proposals in March for advisers for what it called a liability management exercise. The southern African nation had about $11.2 billion of external debt at the end of December, after years of excessive borrowing pushed up debt servicing costs and drained its foreign reserves.

Finance Minister Bwalya Ng’andu said on May 17 an “over-ambition” to plug an infrastructure deficit had resulted in an increasing debt burden. Zambia’s borrowing, which the International Monetary Fund sees exceeding 100% of gross domestic product this year, is blocking the nation from accessing emergency financing from the Washington-based lender.

Losing bidders, which included Newstate Partners, Potomoc Group, Deutsche Bank AG and Rothschild & Co., had until May 29 to appeal the decision to award the tender to Lazard, according to a finance ministry letter dated May 26, seen by Bloomberg.