The Ministry of Finance (MoF) has released a major statement regarding its ongoing efforts to restructure the $1 billion bond (carrying a 6.625% interest rate) that matured in 2024. According to the official statement issued on May 27, 2026, the restricted dialogue session held from May 6 to May 27, 2026, with the primary bondholders’ group known as the “Ad Hoc Committee,” ended without any agreement, officially concluding the designated negotiation period.
A major focus of the discussions was to ensure that any potential agreement would meet the strict Comparability of Treatment (CoT) principle established by the co-chairs of the Official Creditor Committee (OCC).
MoF recalled that, according to the agreement in principle initially reached on January 12, 2024, the debt restructuring included the use of a Value Recovery Instrument (VRI). This VRI mechanism was designed to allow additional payments to creditors based on Ethiopia’s future macroeconomic performance.
However, the OCC indicated that the country’s broader macroeconomic conditions were not conducive to such a complex mechanism and pointed out that the structure failed to comply with the CoT principle.
Following this development, Ethiopia prepared an alternative “revised proposal” that completely eliminated the VRI mechanism. This new alternative was reviewed by the OCC co-chairs and was successfully verified to meet the CoT principle.
As detailed in the document, the commercial terms approved by the OCC co-chairs and offered for the issuance of the new bond involved issuing $880 million in new bonds, which represents a 12% haircut on the original $1 billion principal debt. The maturity date was set for July 15, 2029, with an annual interest rate of 4.25%, payable semi-annually every January 15 and July 15 until the debt is fully settled.
The debt amortization schedule was arranged for the principal to be paid in four consecutive installments: $180 million on July 15, 2026; $180 million on July 15, 2027; $260 million on July 15, 2028; and $260 million on July 15, 2029.
Additionally, along with offering a consent fee of 0.5% of the original 2024 bond value, the proposal included a provision to fully clear Past Due Interest (PDI) totaling $99.375 million at the time of settlement, which accumulated from three missed coupon payments between December 2023 and December 2024.
When this revised proposal was presented to the private bondholders’ “Ad Hoc Committee” within the designated negotiation timeframe, the committee rejected the terms. Consequently, the negotiation period concluded without reaching an agreement between the government and private creditors.
While the Ministry of Finance expressed its disappointment with the committee’s decision, it reaffirmed that Ethiopia remains committed to honoring its obligations. The government reiterated its firm resolve to find a market-based solution for the 2024 bond that complies with the OCC’s CoT principle and upholds the commitments made under the International Monetary Fund (IMF) program.
