Refinancing of bonds refers to the reselling of existing instruments when they reach maturity to fresh financiers who will issue new conditions and new repayment schedules.
The two Eurobonds that the PF Government issued, one for US$750 million and another for US$1 billion are falling due in 2022 and 2024 respectively.
This will require government paying back the full principle amounts of S$750 million and US$1 billion besides the annual interest payment being made.
Mr Yamba told Journalists in Lusaka that Government is seriously considering reselling the debt to fresh financiers as a way of avoiding defaulting on the repayments.
He said talks have commenced with key stakeholders including the book runners who were involved in the two issuances on possibility of refinancing the bonds.
Mr Yamba also revealed that the other option is to set up a sinking fund which will hold certain amounts which could be redeemed at the time of making the fill payments on the bonds.
He said the sinking fund could be held in US dollar or in Kwacha but added that it would require setting aside funds which could ordinarily go into the social sector.
‘On refinancing, this involves asking prospecting financiers to buy that bond and give you a longer maturity period so that come 2024 or 2022, you don’t need the actual cash to pay back that bond and somebody buys that bond and gives you a longer maturity period, say more 20 years,’ Mr Yamba explained.
He added, ‘We are looking at these options and we shall ensure that there is no fiscal distress come 2022, so that the nation is comforted that there shall be no anxieties that we shall fall to pay back that bond come 2022 and 2024 when they fall due.’
Mr Yamba confirmed that Zambia’s total debt stock currently stands at 4.8 billion US dollars.