Ethiopia said negotiations with holders of its one-billion-dollar Eurobond have collapsed after a committee representing bondholders rejected the government’s revised restructuring proposal.
In a statement, the Ministry of Finance said discussions held between May 6 and May 27 with an Ad Hoc Committee of bondholders ended without agreement after investors rejected revised terms that had already been deemed compliant with the “comparability of treatment” principle by Ethiopia’s Official Creditor Committee (OCC).
The failed talks concern Ethiopia’s 6.625 percent Notes due 2024, the country’s only international sovereign bond, on which it defaulted in late 2023 amid mounting debt and foreign exchange pressures.
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The ministry said the revised proposal removed a previously proposed value recovery instrument following objections from official creditors, who argued that Ethiopia’s rapidly evolving macroeconomic conditions made such an instrument unsuitable.
“The Ad Hoc Committee rejected the Revised Proposal, and the Restricted Period was subsequently terminated,” the ministry said.
Under the revised proposal, Ethiopia offered bondholders a new 880 million dollar bond, implying a 12 percent haircut on the original principal. The proposal included staggered repayments between 2026 and 2029 and a reduced interest rate of 6.15 percent.
The government also proposed paying three missed coupon payments totaling about 99.4 million dollars in full at settlement, alongside a 0.5 percent consent fee.
According to the ministry, the OCC co-chairs confirmed the revised terms satisfied comparability of treatment requirements under Ethiopia’s debt restructuring framework with official creditors.
Despite the collapse in negotiations, Ethiopia said it remains committed to pursuing a “market-based solution” compatible with commitments under its International Monetary Fund programme.
The ministry added that authorities would continue engaging stakeholders while also assessing “all available options,” including a potential exchange offer or other market transaction involving the bond.
The latest setback marks another complication in Ethiopia’s long-running debt restructuring process, one of the most closely watched sovereign debt cases under the G20 Common Framework.
