LONDON, Oct 14 (Reuters) – Zambia’s bonds fell heavily on Wednesday as a escalating row between the government and the country’s private sector creditors fed fears of a ugly default by one of the world’s largest copper producers.
One of the country’s international bonds due to pay a $42.5 million coupon payment on Wednesday slumped over 3 cents on the dollar ZM105638671=, its biggest drop since March when the government first signalled it wanted to delay debt payments.
Zambia’s finance ministry had issued a statement late on Tuesday repeating a request made to creditors last month for a number of its debt payments to be defered until April.
Creditors had rejected that request, however, saying the country had not laid out how it would get its debts under control again, or discussed the issues with them.
“Should Zambia fail to reach an agreement with its commercial creditors (including holders of its Eurobonds)… the Republic with its limited fiscal space will be unable to make payments,” Tuesday’s statement from the government said.
(Reporting by Marc Jones; Editing by Tom Arnold)
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