Ethiopia has reached a preliminary agreement with a key group of bondholders on the restructuring of its US$1 billion Eurobond (about 1.0 billion dollars) that matured in 2024, marking a significant step in the country’s prolonged debt overhaul.
The finance ministry said on Monday that negotiations held between June 5 and June 28 resulted in an “agreement in principle” on the broad terms of the restructuring.
Ethiopia has been seeking to rework its only international bond since requesting debt treatment under the G20 Common Framework in 2021. The country defaulted on the Eurobond in late 2023 after failing to make a coupon payment, with restructuring talks progressing slowly since then.
According to the ministry, discussions centred on the parameters of a new financial instrument that would be offered to bondholders alongside a new bond.
The two sides agreed on the creation of a New Money Warrant, an instrument designed to complement the new bond as part of the restructuring package.
The ministry said the warrant’s terms had been shared with the International Monetary Fund (IMF) and the co-chairs of Ethiopia’s Official Creditor Committee.
It added that the IMF had confirmed the proposed instrument was consistent with the country’s debt sustainability targets and programme parameters, while the co-chairs of the Official Creditor Committee had raised no objection to the proposal.
The preliminary agreement represents progress in Ethiopia’s efforts to complete its sovereign debt restructuring and restore access to international capital markets. Final terms of the restructuring are expected to be agreed before the deal is formally implemented.
