Ethiopia has struck a preliminary agreement with a group of investors holding some of its $1 billion 2024 international bond, according to the Finance Ministry, a crucial step on the African nation’s path to restructure its debt.
The draft agreement covers the main financial terms of the debt rework, a statement on the ministry’s official Facebook page said on Friday.
The ministry had also communicated the terms of the agreement to the International Monetary Fund and its Official Creditor Committee, and was waiting for feedback from both.
“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,” the statement said.
The East African nation defaulted on its sole international bond in late 2023 and opted to rework its debt under the G20’s Common Framework initiative, which requires similar treatment of all debt owed to bilateral, Eurobond and other commercial creditors.
The government has been engaging with bondholders on potential paths to restructuring for months but progress has been slow.
The government formalised a restructuring deal with bilateral creditors in July which, according to the finance ministry, would provide cashflow relief of more than $3.5 billion and had paved the way for talks with bondholders.
According to the statement on Friday, Ethiopia held formal talks with the bondholder group between December 23 and January 1. It added that the Ad Hoc Committee is made up of institutional holders controlling in aggregate more than 45% of the 2024 bond. Ethiopia said it wanted to implement the restructuring as early as possible in 2026.
A spokesperson for the IMF said the Fund welcomed the agreement.
“This marks an important step toward restoring debt sustainability,” the spokesperson said in an emailed statement.
“We will assess the consistency of the agreement with the objectives and parameters of the IMF-supported program in the coming days.”
