Citi has upgraded Zambia’s international bonds to overweight from marketweight, citing improved political stability after President Hakainde Hichilema secured a second term and signalling stronger investor confidence in the country’s debt market.
The bank also expects to buy Zambia’s seven-year local currency bond at an auction that will mark the first sale of local government debt since Hichilema was declared the winner of last week’s election.
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Hichilema won about 60 percent of the vote, giving his administration another mandate to pursue fiscal reforms and complete the country’s long-running debt restructuring.
Citi said demand for the local currency bond could be strong because liquidity in Zambia’s financial system currently exceeds the amount of debt being offered. That could give the government more favourable domestic financing conditions as investors respond to a more predictable political outlook.
