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Bondholders Strike a Eurobond Deal, Ending Deadlock

Jun 29 , 2026

The Ministry of Finance has reached an agreement, in principle, with an ad hoc committee of bondholders to restructure Ethiopia's one-billion-dollar Eurobond, ending months of deadlock with a 12pc principal haircut.

The deal reverses a collapse only weeks earlier. The breakthrough follows a tense impasse in May 2026, when bondholders rejected a "vanilla" restructuring proposal that excluded a value recovery instrument (VRI). An earlier proposal linking repayments to Ethiopia's future macroeconomic performance had already been abandoned after the Official Creditor Committee (OCC) ruled it inconsistent with the comparability-of-treatment principle.

The rejection of the revised offer prompted the government to suspend restricted discussions and publicly express disappointment over the lack of consensus.

The deadlock was resolved through negotiations held during a second restricted period between June 5 and June 28, 2026, culminating in a tradable "New Money Warrant". The instrument grants bondholders subscription rights to participate in a future international bond issuance of up to one billion dollars, offering potential upside while remaining within the OCC's restructuring framework.

The Ethiopian government will pay a 10-million-dollar work fee to the ad hoc committee of bondholders, and the committee's advisory fees and expenses will be deducted pro rata from the settlement consideration.

Under the restructuring terms, the existing 2024 Notes will be exchanged for a new 880-million-dollar bond maturing in July 2029 with a 6.15pc coupon.

The International Monetary Fund (IMF) and the OCC co-chairs have confirmed that the terms are consistent with Ethiopia's debt-sustainability goals.

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