Ethiopia Reaches Agreement in Principle on $1 Billion Eurobond Restructuring

Ethiopia has reached an agreement in principle with an Ad Hoc Committee of bondholders regarding the restructuring of its $1 billion Eurobond, which carries a 6.625% coupon rate and is due in 2024. This development follows over two years of seeking debt relief and a year after Ethiopia defaulted on the bond in December 2023, marking it as the first African country to default on an international bond since Ghana. The Ministry of Finance announced that the agreement was reached after restricted discussions held between December 23, 2025, and January 1, 2026, with institutional investors representing more than 45% of the bond.

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Ethiopia's financial challenges escalated after it defaulted on the Eurobond due to a missed $33 million coupon payment. The country has been engaged in negotiations under the G20's Common Framework initiative, which mandates equitable treatment of all creditors, including bilateral and commercial lenders. Prior negotiations with private creditors collapsed in October 2025 due to disagreements over the scale of debt relief and loss-sharing mechanisms. In July 2025, Ethiopia formalized a restructuring deal with bilateral creditors, which provided over $3.5 billion in cash flow relief.

Ethiopia Reaches Deal in Principle on $1bln Eurobond

Finance Minister Ahmed Shide emphasized the importance of the agreement, stating that it aligns with Ethiopia's ongoing International Monetary Fund (IMF) program and adheres to the Comparability of Treatment principle applied by the Official Creditor Committee (OCC). The Ministry of Finance has communicated the agreed financial terms to both the OCC and the IMF for non-objection and confirmation of consistency with Ethiopia's long-term debt sustainability.

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Despite the progress, ratings agencies continue to classify Ethiopia as distressed due to the prolonged default. Critics argue that the restructuring process has been slow and that the country faces significant challenges in restoring investor confidence. The complexity of negotiations and the need for further agreements on non-financial terms may hinder Ethiopia's ability to return to international capital markets.

Ethiopia Reaches Deal in Principle on $1bln Eurobond

Ethiopia aims to implement the restructuring through an exchange offer or consent solicitation as early as possible in 2026. The finalization of the agreement will depend on reaching consensus on non-financial terms and receiving confirmations from the IMF and OCC.

Ethiopia Reaches Agreement in Principle with Bondholders on 2024 Eurobond Restructuring

“Ethiopia also commits to expedite the implementation of the restructuring of the 2024 notes through an exchange offer and or consent solicitation as early as possible in 2026,” — Ahmed Shide, Finance Minister

CityLab

“The terms of the Agreement in Principle have been communicated to the OCC for their non-objection as well as to the IMF to ensure compliance with Ethiopia's long-term debt sustainability,” — Ministry of Finance Statement

Express Tribune

“The discussions yielded an agreement in principle between Ethiopia and the ad hoc committee on the principal financial terms of a restructuring of the 2024 notes,” — Ministry of Finance Statement

Ethiopia Reaches Deal in Principle on $1bln Eurobond

“Progress with private creditors has lagged behind negotiations with bilateral lenders.” — Financial Analysis Commentary

Ethiopia Reaches Deal in Principle on $1bln Eurobond