Ethiopia’s attempt to restructure its $1 billion Eurobond hit a fresh setback after negotiations with private bondholders ended without agreement, the Ministry of Finance said on Wednesday.
In a statement issued on 27 May 2026, the ministry said a restricted dialogue session held from 6 May to 27 May with the bondholders’ Ad Hoc Committee concluded without a deal, effectively closing the designated negotiation period. The talks were aimed at resolving the country’s default on the 6.625% bond that matured in 2024.
The ministry said the discussions were centered on finding terms that would satisfy the Comparability of Treatment principle set by the co-chairs of the Official Creditor Committee, while also keeping the restructuring within a market-based framework.
According to the ministry, an earlier agreement in principle reached on 12 January 2024 had included a Value Recovery Instrument, a mechanism designed to give creditors additional payments if Ethiopia’s macroeconomic performance improved. But the Official Creditor Committee later said the country’s wider economic conditions were not suitable for such a structure and that the proposal did not meet the comparability requirement.
Ethiopia then tabled a revised proposal that removed the VRI entirely. The ministry said the new terms were reviewed by the OCC co-chairs and found to comply with the principle of comparability of treatment.
Under the revised offer, Ethiopia proposed issuing $880 million in new bonds, representing a 12% haircut on the original principal. The new instrument would have matured on 15 July 2029 and carried an annual interest rate of 4.25%, payable twice a year on 15 January and 15 July.
The proposal also laid out a four-stage repayment plan for the principal: $180 million on 15 July 2026, another $180 million on 15 July 2027, $260 million on 15 July 2028 and a final $260 million on 15 July 2029.
In addition, the government offered a consent fee of 0.5% of the original 2024 bond value and proposed clearing $99.375 million in past-due interest at settlement. That amount covered three missed coupon payments between December 2023 and December 2024.
Despite those concessions, the Ad Hoc Committee rejected the revised proposal within the negotiation window, bringing the latest round of talks to an end without agreement.
The Ministry of Finance said it was disappointed by the outcome, but stressed that Ethiopia remains committed to honoring its debt obligations. It added that the government would continue seeking a market-based solution for the 2024 bond that complies with the Official Creditor Committee’s comparability principle and aligns with the commitments under the International Monetary Fund program.
