As part of the agreement, Beijing and the other creditor countries – known as the Official Creditor Committee (OCC) – pushed for comparability of treatment (CoT) principle in which private bondholders would have to offer comparable debt relief.

Patrick Curran, a senior economist at research firm Tellimer, said official creditors were averse to nominal haircuts, preferring longer maturity extensions and lower interest payments instead. Bondholders, on the other hand, tended to prefer some level of upfront nominal haircuts in exchange for earlier payments in the form of higher coupons and shorter maturities.

China and other official bilateral creditors want bondholders to take a larger haircut than what Zambia’s government or the IMF deemed necessary.

This did not go down well with private investors, who said the decision was “extraordinary” and would have “significant adverse consequences, most immediately for Zambia”.