The Ministry of Finance (MoF) has officially announced that it has reached an Agreement in Principle (AIP) on principal financial terms with the Ad Hoc Committee of bondholders, successfully concluding the financial restructuring terms for its US$1 billion 6.625% Eurobond due in 2024.
This landmark agreement was achieved following intensive and restricted negotiations held between June 5 and June 28, 2026, resolving the long-standing impasse between the government and institutional investors controlling approximately 45 percent of the existing notes.
Under the new framework, existing bondholders will accept a 12 percent nominal haircut, reducing the original principal debt to US880 million. The Minister of Finance announced that this new bond structure features a balanced amortization schedule designed to sustainably alleviate Ethiopia’s short-term financial pressures.
According to the Minister, the principal will be repaid in four consecutive installments: US180 million in July 2026, US100 million in July 2027, followed by two final payments of US300 million each in July 2028 and July 2029.
This replacement bond will carry a fixed interest rate of 6.15 percent per annum payable semi-annually, with a long first coupon accruing from December 11, 2024, scheduled for payment on July 1, 2026.
The major breakthrough in the negotiations was the introduction of a novel financial mechanism called the “New Money Warrant,” designed to satisfy investors’ commercial interests without undermining strict macroeconomic constraints.
This separate, tradable security grants holders subscription rights for up to US$1 billion of a new seven-year international bond to be issued by Ethiopia in the future. The Minister noted that this future bond will feature a coupon rate priced at a spread of 450 basis points (bps) over the prevailing 6-year U.S. Treasuries at the time of issuance. Crucially, the International Monetary Fund (IMF) reviewed the parameters of this instrument and confirmed its full consistency with Ethiopia’s debt sustainability targets, while the Co-Chairs of the Official Creditor Committee (OCC) have provided their preliminary non-objection.
In addition to the principal restructuring, the Ministry of Finance confirmed that three consecutive missed coupons from the period between December 2023 and December 2024, totaling US99.375 million, will be paid in full as Past Due Interest (PDI) at settlement.
Furthermore, investors will receive a consent fee equal to 0.5 percent of the original 2024 bond nominal value, while a US10 million work fee allocated to the Ad Hoc Committee will be deducted ratably from administrative advisory expenses. With the financial parameters fully established, Ethiopia intends to launch an official exchange offer in the coming months to implement the agreement as soon as the remaining non-financial terms are finalized.
