Bondholders of Ethiopia’s international debt have rejected a revised restructuring proposal submitted by the government, complicating efforts by the East African nation to finalise a long-delayed debt overhaul under the G20 Common Framework, the finance ministry said Thursday.
The decision marks another setback in Ethiopia’s efforts to restructure its US$1 billion Eurobond, which matured in 2024, as the country continues to navigate a broader debt resolution process involving official and private creditors.
According to the Ministry of Finance, the rejection came after formal negotiations held between May 6 and May 27 with an ad hoc committee representing holders of the bond.
Ethiopia had initially reached a preliminary agreement in January with bondholders on key financial terms for restructuring its sole international bond. However, progress stalled after objections were raised by official bilateral creditors.
The Official Creditor Committee, co-chaired by France and China, argued that the proposed terms failed to comply with the “Comparability of Treatment” principle under the G20 restructuring framework. That principle requires countries seeking debt relief to ensure equitable treatment across different creditor groups.
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In response, Ethiopian authorities revised their restructuring proposal and resubmitted it to bondholders during the latest round of negotiations. The updated offer was also endorsed by official creditors, according to the ministry.
However, the ad hoc bondholder committee ultimately rejected the revised terms, prompting the termination of the restricted negotiation period.
“The revised proposal was presented to the ad hoc committee for consideration during the restricted period. The ad hoc committee rejected the revised proposal, and the restricted period was subsequently terminated,” the ministry said in a statement.
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The government added that it would now evaluate alternative approaches, including a possible exchange offer or other market-based solutions related to the 2024 bond.
The stalled negotiations highlight the continuing difficulties facing countries undergoing debt restructuring under the G20 framework, which was designed to streamline debt relief for low-income nations struggling with unsustainable obligations.
Ethiopia defaulted on its Eurobond obligations as part of a broader debt distress episode triggered by a combination of pandemic-related pressures, conflict, and foreign exchange shortages.
The country has since been engaged in complex negotiations with both official and private creditors as it seeks to restore debt sustainability and regain access to international capital markets.
Market reaction to the latest setback was relatively muted. Ethiopia’s dollar-denominated bond traded largely unchanged, with bids around 104.75 cents on the dollar, according to Tradeweb data.
Analysts say investors are closely watching whether Ethiopia will pursue a revised market-based exchange or continue negotiations under the existing restructuring framework.
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A prolonged impasse could complicate the country’s broader economic recovery plans and delay access to new financing from multilateral lenders.
Despite the setback, officials have reiterated their commitment to reaching a comprehensive debt solution that ensures long-term fiscal stability and restores investor confidence in Africa’s second-most populous nation.
