Ethiopia To Reopen $1 Billion Eurobond Talks After Official Creditors Reject Draft Terms

Ethiopia said it will renegotiate plans to restructure its $1 billion international bond after official creditors, including China and France, raised objections to a draft deal agreed with a bondholder group earlier this month.

The finance ministry said the Official Creditor Committee (OCC), through its co-chairs, told Ethiopia the draft does not fully satisfy the “comparability of treatment” principle.

Under the G20 Common Framework, comparability requires the debtor to seek from other official bilateral creditors and private creditors terms at least as favourable as those agreed with the OCC.

Ethiopia had announced in early January that it had reached a preliminary agreement on the main financial terms with a group representing holders of its only international bond, but official creditors needed to sign off before any deal could be implemented.

The Jan. 2 proposal would have exchanged the existing bond for a new $850 million note maturing in mid-2029, implying a 15% principal reduction, and would also have added a value recovery instrument linking potential payouts to the value of Ethiopia’s exports.

In a letter shared by Ethiopia, official creditors described the plan as a “very low restructuring effort” by bondholders and warned that contingent instruments can complicate comparability assessments and risk widely diverging burdens between creditor groups.

Ethiopia said it will resume discussions with the Ad Hoc Bondholder Committee, which it said represents U.S. and European investors holding more than 45% of the 2024 Eurobond, while reiterating its commitment to negotiate constructively and in good faith with both bondholders and official creditors.

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