How Zambia Pulled Off a Debt Buyback No African Nation Has Done Before

A version of this article appeared in Bloomberg's Next Africa newsletter.

Six years ago, Zambia made international headlines for the wrong reasons, becoming the first African country to default on its sovereign debt after missing a dollar bond payment in 2020. Today, the southern African nation is drawing attention of a very different kind.

Zambia launched a cash tender offer to buy back its $1.36 billion bond due in 2053, with the purchase financed using a $600 million loan from the African Development Bank (AfDB) and the country's own resources.

The 2053 bond was created in 2024 as part of Zambia's sovereign debt restructuring under the G20 Common Framework, issued through an exchange that replaced Zambia's three outstanding Eurobonds with two new, longer-dated securities. The instrument carries step-up interest payments, meaning coupons could escalate sharply if certain economic benchmarks were met, giving Zambia a clear incentive to retire the debt before those costs activated.

Zambia announced the tender offer on May 29, 2026. The government later amended the offer on June 4, extending the early participation deadline to June 9 and adding a $65 million incentive for participating holders. The repurchase price was set at between 82.76 cents and 84.35 cents on the dollar, below par but above market prices at the time of the initial offer.

The deal was not without friction. A group of bondholders opposed the tender, saying it was conducted without negotiation and would harm investor interests. Their lawyers described the terms as materially adverse to noteholders, warning that if 75% of the notes were tendered, it would trigger a clean-up call provision, allowing Zambia to redeem all remaining bonds and cut holders off from any future upside, including the looming coupon step-up.

Despite that resistance, the buyback cleared. Zambia received enough support to buy back the 2053 debt in full after sweetening the offer with the additional $65 million. Participation exceeded 75%, the threshold that allowed Zambia to compel any remaining holders to sell their notes.

Fitch clarified that the tender did not aim to avoid a traditional payment default, with analysts considering Zambia capable of servicing the bond under both baseline and upside scenarios. S&P Global Ratings had already removed its default rating for the country, assigning a CCC+ long-term foreign currency sovereign credit rating with a stable outlook.

Analysts noted that using concessional AfDB funding to retire higher-cost market debt could serve as a model for other frontier issuers emerging from restructurings. Whether other post-restructuring African sovereigns follow the same path will depend on their access to similar financing and the willingness of their creditors to participate.