(Bloomberg) --

Zambia appointed Lazard Freres as financial adviser to help it restructure its external debt, the Finance Ministry said.

Africa’s second-biggest copper producer is seeking to avert a debt crisis looming even before the Covid-19 pandemic throttled the global economy. The government is hoping that the process will be able to move quickly enough to convince the International Monetary Fund that it’s on track to achieving debt sustainability, unlocking much-needed emergency funding.

Zambia invited proposals in March for advisers for what it called a liability management exercise. The southern African nation had about $11.2 billion of external debt at the end of December, after years of excessive borrowing pushed up interest costs and drained its foreign reserves. The government said it won’t force any lenders into a restructuring.

“The government has no intention of unilaterally restructuring debt without consulting creditors,” Treasury Secretary Fredson Yamba said in a statement late on Wednesday. “We will respect agreements and diligently use market-based instruments in our debt management.”

Finance Minister Bwalya Ng’andu said on May 17 an “over-ambition” to plug an infrastructure deficit had resulted in an unsustainable debt burden. Zambia’s borrowing, which the IMF sees exceeding 100% of gross domestic product this year, is blocking the nation from accessing emergency financing from the Washington-based lender.

Appeal Award

Zambia’s $1 billion in Eurobonds due April 2024 were little changed at 46.7 cents on the dollar by 9:30 a.m. in Lusaka, the capital. They had fallen to as little as 31.7 cents in March, and had traded at as much as 94.2 cents just two years ago.

Losing bidders for the financial advisory services role, which included Newstate Partners, Potomoc Group, Deutsche Bank AG and Rothschild & Co., had until May 29 to appeal the decision to award the tender to Lazard, according to a finance ministry letter dated May 26, seen by Bloomberg.

Lazard’s deal is worth $5 million and will last three years. The Paris-based company advised neighboring Mozambique on its restructuring of a $727 million Eurobond. That process started in 2016 and concluded late last year. Lebanon and Argentina, also seeking debt restructuring, appointed Lazard as advisers too.

(Updates with Eurobonds in sixth paragraph)

©2020 Bloomberg L.P.