Ethiopia has reached a preliminary agreement with key bondholders to restructure its defaulted $1 billion international bond, marking a significant step toward resolving a debt crisis that has persisted for years, the Ministry of Finance announced on Monday.
Under the proposed terms, Ethiopia will issue an $880 million restructured bond to be repaid in installments, with the final maturity set for July 2029 and an interest rate of 6.15%, consistent with earlier discussions. The country will also fully settle three missed coupon payments totaling $99.375 million, alongside a consent fee for participating creditors.
Related articles
The agreement further includes a “New Money Warrant,” which allows bondholders to purchase a future Ethiopian bond of up to $1 billion at a market-linked interest rate. Alternatively, Ethiopia may opt to settle this obligation in cash, capped at $90 million.
According to the Ministry of Finance, the International Monetary Fund has approved the warrant structure as aligned with Ethiopia’s debt sustainability framework. In addition, co-chairs of Ethiopia’s Official Creditor Committee, representing bilateral lenders including China and France, have expressed no objection to the deal.
Ethiopia defaulted on the bond in December 2023 after missing a $33 million coupon payment. Previous restructuring attempts in early 2026 collapsed amid disagreements with official creditors, while bondholders rejected a revised proposal in May.
The Ad Hoc Committee involved in negotiations represents investors holding around 45% of the outstanding notes.
The government said it intends to finalize the restructuring through an exchange offer in the coming months once remaining non-financial terms are agreed.
Following the announcement, Ethiopia’s bonds rose by more than 2 cents, trading at 107.625 cents on the dollar, its highest level since January, according to Tradeweb data.
