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“Citi Turns Bullish on Zambia Debt as Election Signals Potential Credit Upgrades” 🚨

Citigroup is becoming increasingly optimistic about Zambia’s debt market, with the country’s recent presidential election potentially opening the door to stronger investor confidence, additional credit-rating upgrades and further gains in Zambian government bonds.

The renewed optimism comes after President Hakainde Hichilema secured a second term, giving investors the policy continuity they had been looking for. Hichilema won roughly 60% of the vote, according to election results reported this week.

For investors, the election is important because Zambia has spent the past several years rebuilding its financial credibility after becoming the first African country to default on its sovereign debt during the pandemic-era crisis.

📈 Zambia’s Debt Recovery Is Attracting Investors

Zambia’s local-currency government bonds have already delivered an extraordinary performance.

The country’s kwacha-denominated bonds have gained roughly 36% in U.S.-dollar terms this year, making them the best-performing emerging-market local bonds tracked by Bloomberg, compared with approximately 1.35% for the broader emerging-market local-currency bond index.

Citi believes that rally could continue if the election result produces political stability and reinforces the government’s economic reform agenda.

The logic is relatively straightforward: investors who previously avoided Zambia because of default risk and political uncertainty may now become more comfortable increasing their exposure as the country’s fiscal position improves.

🏦 Credit Upgrades Could Be the Next Catalyst

One of the biggest potential catalysts for Zambia’s debt is the possibility of additional credit-rating upgrades.

Zambia has already made substantial progress since its 2020 default. The country completed major restructuring efforts involving both official creditors and private bondholders, while international lenders have continued supporting its economic recovery.

S&P upgraded Zambia’s foreign-currency sovereign rating to CCC+/C from selective default, formally removing the country from default status. Fitch had previously upgraded Zambia to B- with a stable outlook in November 2025.

Further improvement in Zambia’s credit profile could be significant for bond investors because higher ratings can reduce perceived default risk and potentially broaden the pool of institutional investors willing or able to hold the country’s debt.

💵 Why the Election Matters to Bond Investors

Elections can create substantial uncertainty for emerging-market debt.

Investors typically want to know whether a new administration will maintain fiscal discipline, honor existing debt agreements and continue working with institutions such as the IMF and World Bank.

Hichilema’s re-election removes one major source of uncertainty.

Reuters reported that investors welcomed the prospect of policy continuity following his victory, while the government is expected to continue pursuing economic reforms and seek a new IMF program after its previous $1.7 billion arrangement ended in January.

That continuity could be particularly important because Zambia is still working to rebuild full access to international capital markets.

🧾 From Default to Recovery

Zambia’s debt story has changed dramatically over the past several years.

In 2020, the country defaulted on its sovereign debt as the pandemic intensified existing fiscal pressures. Debt restructuring subsequently became one of the central priorities of Hichilema’s administration after he took office in 2021.

The government has since negotiated significant restructuring agreements with official creditors and private bondholders.

That process has helped reduce immediate financing pressure and improve investor confidence.

But Zambia is not completely out of the woods.

Debt levels remain elevated, financing requirements remain significant and the country still needs to demonstrate that improved fiscal management can be sustained over the long term.

⛏️ Copper Could Strengthen the Investment Case

Another major reason investors are watching Zambia is copper.

Zambia is Africa’s second-largest copper producer, and the metal has become strategically important because of its role in electric vehicles, renewable-energy infrastructure, power grids and data centers.

Hichilema has made increasing copper production a major economic priority, with the government targeting a dramatic expansion of output over the coming years. Reuters reported that Zambia wants to nearly triple annual copper production to around 3 million metric tons.

Higher copper production could provide Zambia with greater export earnings, stronger foreign-exchange inflows and additional government revenue.

For bond investors, that matters because stronger export revenues can improve a country’s ability to service foreign-currency obligations and stabilize its external accounts.

⚠️ Risks Haven’t Disappeared

Despite Citi’s optimism, Zambia’s debt story remains a high-risk investment case.

The country’s economic recovery still faces several challenges, including elevated debt levels, energy shortages, currency volatility and dependence on copper prices.

Climate conditions are another concern. Zambia has previously suffered from drought-related disruptions to hydroelectric power generation, which can hurt industrial activity and mining output.

There are also political and social risks.

Although Hichilema won decisively, the election was accompanied by opposition allegations of fraud and concerns about political freedoms. Authorities also detained opposition figures following the vote, increasing international scrutiny of Zambia’s democratic institutions.

If political tensions intensify, investor confidence could be affected.

🌍 The Bigger Emerging-Market Story

Zambia’s improving debt outlook reflects a broader trend in emerging markets: investors are willing to take on greater risk when countries demonstrate credible fiscal reforms, stabilize their finances and move closer to sustainable debt levels.

For Zambia, the combination of debt restructuring, improving credit ratings, strong copper demand and political continuity is creating a much more favorable backdrop than the country faced immediately after its default.

Citi’s bullish stance suggests that some investors believe the market has not yet fully priced in Zambia’s potential recovery.

If further credit upgrades materialize, foreign investors return in greater numbers and copper revenues remain strong, Zambian bonds could have additional room to perform.

🔎 Bottom Line

Zambia has gone from being one of Africa’s most prominent sovereign-debt distress stories to becoming an increasingly interesting opportunity for emerging-market investors.

The election has provided political continuity. Debt restructuring has reduced some of the pressure that contributed to the country’s default. Credit-rating agencies have begun recognizing the improvement, while Citi sees additional upside for local debt.

The next test will be whether Zambia can turn this renewed investor confidence into sustainable economic growth, stronger public finances and continued access to international capital markets.

If it succeeds, Zambia could become one of the more closely watched sovereign-debt recovery stories in emerging markets.