Ethiopia Edges Closer to Debt Resolution with $1bn Bond Restructure Deal
Last update: June 29, 2026
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After years of deadlock, Ethiopia just cut a preliminary deal with bondholders that could finally pull its finances back from the brink.
Ethiopia has reached a preliminary deal with key bondholders to restructure its defaulted $1 billion international bond, the finance ministry said on Monday. The move takes the country one step closer to ending a debt crisis that’s dragged on for years, cbinews.tv reports.
This case is being watched closely. It’s seen as a major test of the G20’s Common Framework. That’s the debt relief system launched during COVID-19 to speed up restructurings, but it’s been plagued by divisions between Western lenders, China and private investors.
Here’s what the proposal looks like. Ethiopia will issue an $880 million bond to be repaid in instalments through 2029 at a 6.15% interest rate, terms already agreed with bondholders. It will also pay $99.4 million in missed coupons and a consent fee.
The deal includes a “New Money Warrant” too. That gives bondholders the option to buy into a future Ethiopian bond of up to $1 billion at a market-linked interest rate. Ethiopia can choose to settle the warrant in cash instead, capped at $90 million.
Samir Gadio, head of Africa strategy at Standard Chartered, said the warrant was the key element bridging the gap between the parties.
Ethiopia said the International Monetary Fund has signed off on the warrant structure as consistent with its debt sustainability targets. The statement added that co-chairs of its Official Creditor Committee, China and France, had raised no objections. However, the deal is still subject to approval by the wider committee.
Neither the IMF nor the bondholder group immediately commented.
Ethiopia’s bonds jumped 2.9 cents after news of the preliminary deal. They bid at 108.423 cents on the dollar, their highest level since January, according to Tradeweb data.
The agreement caps a long and turbulent restructuring. Ethiopia signalled back in January 2021 that it would seek debt relief under the Common Framework before defaulting in December 2023.
It reached an agreement in principle with the Official Creditor Committee in March 2025, but talks with commercial creditors proved more difficult.
The Ethiopia bondholder group involved in the talks, the Ad Hoc Committee, represents holders of roughly 45% of the outstanding notes.
Ethiopia said it plans to implement the deal through an exchange offer in the coming months. That’s once remaining non-financial terms are agreed and it has received wider Official Creditor Committee signoff.
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