Ethiopia's Eurobond restructuring progresses after creditor committee approval

This approval signals the nearing conclusion of negotiations regarding Ethiopia's debt, which it defaulted on in late 2023. The one-billion-dollar Eurobond, issued in 2014, was Ethiopia’s first and only sovereign issuance on international capital markets, primarily funding industrial parks. Ethiopia defaulted in December 2023 after missing a coupon payment of approximately USD 33 million.

Restructuring negotiations began in mid-2025, with an initial proposal for a 16 percent haircut rejected by bondholders. In January 2026, a revised proposal with a 15 percent haircut, a new bond maturing in July 2029 with a 6.125 percent coupon rate, and nearly USD 100 million in past-due interest, was accepted by an ad hoc committee representing bondholders. However, the OCC initially rejected this proposal, citing a violation of the Comparability of Treatment principle.

The latest agreement, co-chaired by France and China, introduces a New Money Warrant, allowing bondholders to subscribe to a future Ethiopian bond issuance. The OCC emphasized that this complex structure is a one-off exception for Ethiopia and does not set a precedent for future sovereign debt restructurings under the Common Framework. Ethiopia's Minist