Ethiopia Reaches Preliminary Agreement with Bondholders on Eurobond Restructuring

The Ethiopian government has reached an agreement in principle with a committee representing approximately 45% of its defaulted US$1 billion Eurobond holders, breaking a months-long deadlock. Announced by the Ministry of Finance on June 29, 2026, the preliminary deal outlines the financial framework to restructure the debt through a new bond issuance, pending final official creditor approval.

​Under the proposed terms, the existing US1 billion bond will be exchanged for a new US880 million note, representing a 12% haircut for investors. The restructured bond is set to mature in July 2029 with an annual interest rate of 6.15%. Repayments will be structured across four installments, beginning with an initial US$180 million principal payment scheduled for July 2026.

​Additionally, the agreement requires Ethiopia to fully repay three missed coupon payments totaling US99.375 million, covering accrued interest from December 2023 to December 2024. Participating creditors will also receive a 0.5% consent fee. A notable feature of the deal is a detachable “New Money Warrant,” granting bondholders the right to subscribe to a future international Ethiopian bond of up to US1 billion under pre-agreed commercial terms.

​The International Monetary Fund (IMF) reviewed the proposal and confirmed its alignment with Ethiopia’s debt sustainability targets under its ongoing economic reform program. The co-chairs of the G20 Common Framework’s Official Creditor Committee (OCC) have also issued a non-objection. This progress follows a tense period in early June when frustrated bondholders threatened legal action after a previous government proposal was rejected for violating comparability of treatment rules.

​Ethiopia became the third African nation to default on its Eurobond obligations after missing a US$33 million coupon payment in December 2023. The Ministry of Finance expects to launch the formal restructuring via an exchange offer or consent solicitation in the coming months.

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