Ethiopia Bondholders Plan English Court Action As Creditors Block Initial $1 Billion Restructuring Deal
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A major investor group in Ethiopia’s only international bond said it plans to take legal action after the country’s bilateral creditors blocked an initial agreement with the government on restructuring the debt.
Ethiopia said it would reopen negotiations after the Official Creditor Committee (OCC), chaired by China and France, said the draft bondholder deal did not meet the “comparability of treatment” principle under the G20 Common Framework.
The bondholder committee called the OCC’s decision “completely unreasonable,” while the OCC said it was concerned the initial deal would not result in similar treatment between commercial and official creditors.
Ethiopia defaulted on the bond in December 2023 and formalised a restructuring agreement with official creditors last July, which opened the way for talks that produced the draft deal announced in early January.
That draft proposed a 15% principal writedown via an exchange into a new $850 million bond maturing in mid-2029, plus a value recovery instrument linking payouts to the value of Ethiopia’s exports.
The bondholder committee, which represents more than 45% of investors in the bond, said it wants to engage constructively but will now sue in an English court to enforce payment of outstanding principal and interest, and the IMF has raised projections for export earnings and reserves.
