By Reuters Staff
HARARE, March 4 (Reuters) - The African Import and Export Bank (Afreximbank) has agreed to help Zimbabwe raise funding to refinance $1.4 billion in loans to the pan-African lender, a copy of the agreement seen by Reuters showed on Thursday.
The agreement will give the country some breathing space over the loan repayments to Afreximbank, which has become one of the biggest lenders to Zimbabwe after it was shut out from international financial institutions two decades ago for failing to repay its debts.
Between December 2017 and December 2019, foreign currency-starved Zimbabwe, through its central bank, entered into three loan deals with Afreximbank amounting to $1.4 billion and using gold and platinum as collateral.
The agreement to refinance the loans, which is dated December 2020, was signed by central bank government John Mangudya on behalf of Zimbabwe and Ibrahim Sagna, Afreximbank’s head of advisory and capital markets.
“Afreximbank will use all efforts to assist in the debt raise as set out in this Mandate Letter. For the purposes of clarity, Afreximbank will identify and approach prospective financial institutions and investors who would potentially be willing to provide financing to Reserve Bank of Zimbabwe and source letters of intent from interested lenders/investors,” the agreement said.
Mangudya did not answer his phone when called by Reuters, nor respond to a message seeking comment. Afreximbank did not immediately respond to emailed questions.
Afreximbank will act as sole advisor and will remain a creditor. The original loans had terms of between three and five years and an interest rate of between 5.8% and 6.75% above the London Inter-Bank Offer Rate (LIBOR).
Under the deal, the loan facilities would have a longer repayment period of seven years and a fixed interest rate of 7.62%.
Zimbabwe owes foreign lenders, including the World Bank and African Development Bank more than $8 billion. (Reporting by MacDonald Dzirutwe; Editing by Kirsten Donovan)