Ethiopia’s $1 Billion Debt Restructuring Deal Signals a Turning Point

June 30, 2026
By Mintesinot Nigussie

Ethiopia has agreed with a group of international bondholders on the main financial terms of a restructuring plan for its 1 billion US dollars Eurobond, a move that could allow the country to advance towards restoring access to international capital markets.

The agreement in principle was reached with an ad hoc committee representing around 45 percent of holders of Ethiopia’s 6.625 percent notes due in 2024 after negotiations held between June 5 and June 28, according to the Ministry of Finance.

Under the proposed arrangement, investors would exchange their existing holdings for a new bond with a face value of 880 million US dollars, reflecting a 12 percent reduction in the outstanding principal. The replacement bond would mature on July 15, 2029 and carry a 6.15 percent annual coupon.

Repayment of the new bond would be spread over four years, with Ethiopia scheduled to pay 180 million US dollars in July 2026, 100 million US dollars in July 2027, and 300 million US dollars in both July 2028 and July 2029.

The restructuring framework also includes a separate tradable instrument known as a New Money Warrant, which would provide bondholders with subscription rights to a future international bond issuance by Ethiopia.

The warrant would be linked to a potential future Eurobond of up to 1 billion US dollars. The future issuance would have a seven-year maturity, with interest terms set at 450 basis points above six-year US Treasury yields at the time of issuance.

The Ministry said the proposed structure had been reviewed by the International Monetary Fund and was considered consistent with Ethiopia’s debt sustainability objectives under its reform programme. The proposal also received no objection from the co-chairs of the Official Creditor Committee, subject to approval by the wider creditor group.

Ethiopia entered negotiations with commercial creditors after missing a 33 million US dollars coupon payment on its Eurobond in December 2023. The country has since pursued debt treatment discussions alongside fiscal and economic reforms aimed at easing pressure on public finances.

The government said it plans to implement the agreement through an exchange offer or consent solicitation once discussions on remaining non-financial terms are completed and the Official Creditor Committee provides final approval.

The negotiations were supported by Lazard and White & Case, which advised Ethiopia, while Ankura Sovereign Advisors and Weil, Gotshal & Manges represented the bondholder committee.

Source: FSX Business News