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Zambia FinMin: Default raises risk of legal action by bondholders

LUSAKA, Nov 18 (Reuters) - Zambia finance minister Bwalya Ng’andu said on Wednesday that the country’s sovereign default on its $3 billion in Eurobonds had increased the risk of bondholders taking legal action.

Zambia became Africa’s first pandemic-era sovereign default after it failed to pay a $42.5 million Eurobond coupon at the expiry of the grace period on Friday.

“There are some risks associated with the decision not to pay. These include bondholders taking legal action to enforce their rights under the financing arrangements,” said Ng’andu, addressing parliament.

“The ministry will work closely with our legal advisers to respond to this possible eventuality,” he said, adding that the government had retained its current financial adviser.

In May, Zambia appointed French company Lazard Freres to help with the debt overhaul. (Reporting by Chris Mfula in Lusaka, writing by Karin Strohecker in London, editing by Joe Bavier in Johannesburg)

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