Zambia’s bond market among top performers

By BUUMBA CHIMBULU

ZAMBIA’S local-currency bond market has emerged as the best-performing among emerging economies in 2026, buoyed by improving macroeconomic fundamentals, strong investor confidence and a successful debt management strategy.

According to market analysts at Access Bank Group, Zambia’s recent buyback of a US$1.36 billion external bond has significantly strengthened the country’s fiscal outlook.

The transaction was expected to generate approximately US$275 million in future debt-service savings, funds that the government intends to channel towards electricity grid investments.

The analysts noted that the move has reinforced investor confidence in Zambia’s economic management and growth prospects, while also improving perceptions of the country’s debt sustainability.

“Zambia has benefitted from a combination of favourable domestic developments, including rising copper export revenues and increased capital inflows from investors seeking opportunities outside conflict-affected regions,” the analysts said in their latest market commentary.

The positive economic backdrop has translated into exceptional returns for investors.

Bloomberg data cited by Access Bank showed that Zambia’s local-currency government bonds had generated returns of about 39 percent since the beginning of the year, more than double the performance recorded by the next-best emerging market.

The rally had been driven by declining bond yields and a sharp appreciation of the kwacha, which has strengthened by approximately 24 percent against the United States dollar this year.

The local currency extended its gains following the government’s bond buyback announcement, reflecting growing market confidence in the country’s economic trajectory.

“Investor appetite for Zambian debt has also been boosted by policy reforms introduced by the Bank of Zambia. In January, the central bank increased the allocation available to foreign investors in primary bond auctions from 5 percent to 23 percent, a move analysts describe as a key catalyst for foreign participation in the domestic debt market,” the analysts said.

Subsequent bond auctions recorded strong demand from offshore investors, with non-resident buyers accounting for nearly half of the securities sold at one auction shortly after the policy adjustment.

Analysts said Zambia’s relatively high nominal yields continue to attract foreign investors.

Government securities are still offering returns in the mid-to-high teens, while the strengthening kwacha has helped reduce inflation to below seven percent, its lowest level in eight years.

The easing inflationary environment has given the Bank of Zambia room to cut interest rates at three consecutive policy meetings, making Zambia one of the few emerging markets currently pursuing monetary easing while maintaining attractive real yields.

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