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.