Ethiopia’s efforts to restructure its defaulted $1 billion Eurobond have encountered another setback after a committee representing bondholders rejected the government’s latest proposal and warned that some investors are preparing to pursue legal action.
In a statement released on Monday, the bondholder committee said it remains willing to consider alternative solutions but concluded that Ethiopia’s revised restructuring offer does not provide a workable basis for a consensual agreement.
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“While the Committee remains open to considering alternative solutions, the Revised Proposal does not provide for a viable consensual restructuring solution,” the group stated.
The latest development follows the collapse of negotiations over a revised debt proposal that Ethiopia had adjusted to address concerns raised by its official bilateral creditors.
Ethiopia has been seeking to restructure its debt since 2021 and formally defaulted on its international bond obligations in December 2023. Earlier this year, the government reached a preliminary agreement on key financial terms with bondholders. However, the deal later faced objections from the Official Creditor Committee (OCC), co-chaired by France and China.
The OCC argued that the proposed agreement failed to satisfy the “Comparability of Treatment” principle, a requirement under the G20 Common Framework that ensures private creditors provide debt relief on terms comparable to those offered by official lenders.
The disagreement has heightened tensions between Ethiopia and some bondholders. According to Monday’s statement, certain members of the committee had already placed the Ethiopian government on formal notice in April and are now moving closer to legal proceedings.
“Given the lack of tangible results from the recent restricted discussions, those members intend to press forward with legal claims in the English court to protect and enforce their rights under the 2024 Notes,” the committee said.
The group did not disclose how many investors are considering legal action or when any claims might be filed.
Despite the ongoing dispute, Ethiopia’s 2024 international bond remained stable in the market on Monday, with bids holding at approximately 105 cents on the dollar, according to Tradeweb data.
The latest impasse adds further uncertainty to Ethiopia’s debt restructuring process, which remains one of the most closely watched sovereign debt cases under the G20 Common Framework.
Source: Reuters
