A group of foreign bondholders expressed disappointment with Ethiopia’s recent comments on a potential 20% principal haircut on its $1 billion bond, calling the statements incompatible with a good-faith debt restructuring approach.
Ethiopia defaulted on its sole international bond in December and has since made limited progress in restructuring.
Earlier this month, the government surprised bondholders by proposing to reduce the bond principal to $800 million, indicating a 20% haircut.
The creditor group, holding over 40% of the bond, urged transparency and public disclosure of assumptions made with input from official bilateral creditors.
Ethiopia initially sought debt restructuring in 2021 under the G20 Common Framework.
Ethiopia reached a $3.4 billion financing agreement with the IMF in July, aiming to finalize debt restructuring before the first review of the IMF program.
The IMF, however, has not commented on the situation.
Ethiopia’s $1 billion Eurobond fell to 77 cents on the dollar amid these developments.
The country owes nearly $29 billion in external debt, with China and Saudi Arabia being major bilateral creditors.
Formal talks with investors last year failed to reach an agreement.
