Zambia’s local debt market has become a global leader, delivering returns of 39% to investors, with further gains anticipated. This performance is largely attributed to a surge in foreign investment after Zambian authorities increased the limit on non-resident participation in debt auctions to 23% from 5%. Foreign investors accounted for 49% of purchases in a recent K9.3 billion ($486 million) bond sale, where orders more than doubled the initial offering.
The Zambian government also successfully repurchased $1.36 billion of outstanding international bonds, an effort that will save the nation $275 million. This capital is intended to fund improvements to the electricity grid. Citi played a key role as the sole mandated bank for structuring and executing this transaction, which was part of Zambia's broader debt management strategy and contributes to improved debt sustainability. S&P Global Ratings upgraded Zambia's long-term and short-term foreign-currency sovereign ratings from Selective Default (SD) to CCC+/C in November, citing a stronger fiscal outlook for 2026, including plans to halve the budget deficit and achieve over 6% economic growth.
Investor confidence has been significantly restored after Zambia's sovereign default. Citi Zambia CEO Lowani Chibesakunda noted a substantial increase in interest from a diversified investor base, including new players in mining and interest from the Middle East across various sectors, even pharmaceuticals and technology. Economic improvements, such as booming copper export revenues, fiscal consolidation, and rising global demand for critical minerals, have further bolstered Zambia's appeal as an investment destination. The country attracted $1.24 billion in foreign direct investment in 2024, its highest annual inflow since 2015, reflecting a positive response to improving macroeconomic fundamentals.
