"Take a Haircut, Zambia Bond Holders!"

FILE - Zambian president Hakainde Hichilema addresses a press conference at his residence in Lusaka, Zambia. Taken 8.16.2021

Over 100 economists and development experts on Friday called for asset manager BlackRock and other holders of Zambian bonds to cancel some of that debt ("Take a haircut"), saying continuing to pay private creditors was "economically inefficient and morally wrong".

In an open letter released by the campaign group Debt Justice, signatories - including academics Jeffrey Sachs, Jayati Ghosh, Philip Alston, Raj Patel and Cephas Lumina - said it was time for private creditors to step up.

"It is ... imperative that BlackRock and other bondholders agree to fully engage in a large-scale debt restructuring, including significant haircuts, in order to make Zambia's debt sustainable," they wrote.

Eurobond holders held $3 billion of Zambian debt plus $336 million of interest arrears at the end of 2021.

New York-based BlackRock holds around $215 million worth of bonds, the company said.

A company spokesperson said BlackRock had not yet been formally asked to participate in the process but would "approach comprehensive formal sovereign restructuring proceedings constructively and in good faith."

Zambia became Africa's first pandemic-era sovereign default nearly two years ago and is seeking $8.4 billion of debt relief from 2022 to 2025 under a new restructuring framework backed by the Group of 20 major economies.

That will be achieved through a mixture of "haircuts" to loans' original value and maturity extensions, a senior Zambian finance ministry official said earlier this month.

"It would appear unlikely that the full value of the investments will ever be realized," the BlackRock spokesperson said. "Our clients have already experienced losses with respect to their holdings of private sector sovereign debt of Zambia."

World Bank President David Malpass said last week that "a deep debt reduction of 45% in net present value (NPV) terms... is essential".

But Kevin Daly, who chairs a committee of bondholders estimated to hold around 45% of Zambia's international market debt, said on Thursday that a deep haircut would be unacceptable to creditors.

Speaking on Friday, he said the final terms of debt relief must not hinder Zambia's ability to borrow in the future.

"It's important that they reach an agreement with current lenders that is fair for all parties that will help facilitate access to external financing when debt sustainability is restored," he said.