Zambia has received overwhelming backing from bondholders for a pioneering $1.36 billion debt buyback arrangement linked to major upgrades in its electricity infrastructure.
The Government said holders representing 97.85% of the bond’s outstanding principal have agreed to the deal, which has been under negotiation for more than two years.
Under the arrangement, Zambia will use a $600 million loan from the African Development Bank alongside domestic resources to repurchase a high-interest sovereign bond maturing in 2053. In parallel, the country has committed up to $275 million over 15 years to modernise and expand its power grid.
Last week, authorities offered an additional $65 million incentive to bondholders to secure approval for the transaction. Officials describe the initiative as the world’s first “debt-for-development swap” focused specifically on the energy sector, designed to ease debt pressures while accelerating infrastructure investment.
Zambia, which defaulted on its debt following the COVID-19 pandemic, has been pursuing restructuring efforts to stabilise its public finances. Despite progress, nearly half of the country’s 22 million citizens still lack access to electricity, according to national statistics.
The deal is being positioned as a model that could reshape how heavily indebted countries finance development while maintaining fiscal sustainability.