Ethiopia has entered formal negotiations with investors to restructure its $1 billion international bond, sources confirmed on Monday.
The discussions are unfolding in Paris, where a government delegation is meeting bondholders, though officials have provided few additional details.
“There were some meetings scheduled with bondholders,” a source said, adding that no deal is expected imminently, with updates coming later.
Ethiopia’s new central bank governor, Eyob Tekalign, did not immediately respond to requests for comment on the negotiations.
The country’s sole international bond rose as much as 2.6 cents, reaching 94.88 cents on the dollar after news of the talks.
Ethiopia defaulted on the bond in late 2023 and chose to restructure under the G20’s Common Framework initiative.
The initiative demands similar treatment of debt owed to bilateral, Eurobond, and other commercial creditors, ensuring uniform restructuring approaches.
The government formalised a restructuring deal with bilateral creditors in July, securing cashflow relief exceeding $3.5 billion for the nation.
Formal talks with bondholders began after temporary non-disclosure agreements were signed, restricting discussions outside the negotiation room.
A key dispute persists over Ethiopia’s solvency status, with officials calling it a long-term debt issue and investors citing a liquidity problem.
The government proposed a 20% haircut, citing IMF debt sustainability analysis, but investors argue export growth indicates temporary cashflow pressures.
Strong export earnings support investors’ claims, yet the IMF warns that potential drops in aid or foreign investment pose economic risks.
The outcome of these negotiations will shape Ethiopia’s financial stability and its ability to regain investor confidence amid broader regional challenges.
