Ethiopia has finally reached a preliminary agreement with key bondholders to restructure its defaulted $1 billion Eurobond, bringing the country a step closer to resolving a debt crisis that has weighed on its economy since it defaulted in 2023.
Under the proposed agreement, Ethiopia will exchange its existing bond for a new $880 million bond carrying a 6.15% interest rate and maturing in 2029. The government will also repay in full three missed coupon payments totalling $99.4 million, together with a consent fee for participating bondholders.
The restructuring package includes a New Money Warrant, giving bondholders the option to invest in a future Ethiopian bond of up to $1 billion at a market-based interest rate. Alternatively, the government may choose to settle the obligation with a cash payment of up to $90 million.
Ethiopia’s Ministry of Finance said the International Monetary Fund has determined that the proposed warrant structure is consistent with the country’s debt sustainability objectives. The co-chairs of Ethiopia’s Official Creditor Committee, representing bilateral lenders including China and France, have also indicated they have no objection to the agreement.
The latest breakthrough follows months of difficult negotiations. Ethiopia defaulted on its only international bond in December 2023 after missing a $33 million coupon payment, becoming one of several African countries forced to seek debt restructuring under mounting fiscal pressures.
An earlier agreement reached with bondholders in January 2026 collapsed after official creditors argued that the proposed terms failed to satisfy the principle of comparable treatment required under the G20 Common Framework for debt restructuring. Bondholders subsequently rejected a revised proposal in May, prolonging negotiations.
The latest deal appears to have resolved those concerns by securing support from both official creditors and the IMF, significantly improving the prospects for a successful restructuring. The Ad Hoc Committee involved in the negotiations represents holders of roughly 45% of the outstanding Eurobond.
The Ministry of Finance said the agreement will be implemented through an exchange offer in the coming months once the remaining non-financial terms have been finalised. The restructuring forms a key part of Ethiopia’s broader economic reform programme, which includes measures aimed at restoring debt sustainability, stabilising public finances and rebuilding investor confidence.
Financial markets responded positively to the announcement. Ethiopia’s international bonds rose to their highest level since January, reflecting investor optimism that the prolonged restructuring process is nearing completion.
If completed, the agreement would mark a significant milestone in Ethiopia’s efforts to restore access to international capital markets and strengthen its economic recovery after years of financial strain and complex negotiations with both private and official creditors.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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