Ethiopia's Creditors Clear the Last Big Hurdle on Its $1 Billion Bond Restructuring.

Ethiopia's official creditors told the country's finance ministry on Friday that the terms of its proposed $1 billion Eurobond restructuring pass their fairness test, clearing the last formal checkpoint before nearly three years of missed bond payments can be closed out. The ministry said the Official Creditor Committee, co-chaired by China and France, had issued a favourable "Comparability of Treatment" assessment, though it gave no further detail and the outcome still needs sign-off from the wider committee. The government floated the birr in July 2024, a condition the IMF had set for a new $3.4 billion, four-year loan programme approved that same day — the move that unlocked the wider debt restructuring now nearing its close.

Bilateral lenders went first. Ethiopia reached an agreement in principle with its official creditors in March 2025, formalised that July, restructuring $8.4 billion of debt and delivering an estimated $3.5 billion in cash-flow relief. France signed the first individual bilateral deal in February 2026, adding €81.5 million in fresh financing for economic reforms. Bondholders took longer. A preliminary deal reached in January 2026 was rejected by the creditor committee weeks later for breaching the G20 Common Framework's comparability principle — the rule that bondholders cannot get materially better terms than official lenders — largely because it tied extra payments to Ethiopia's export performance. Talks broke down again in May, before a new preliminary agreement reached on June 29 replaced the rejected terms: a new $880 million bond, a 12 percent cut to the original principal, a 6.15 percent coupon, and repayment in annual instalments from July 2026 to July 2029.

Ethiopia will also pay in full three missed coupons totalling $99.375 million and a consent fee worth 0.5 percent of the original bond. Bondholders get a New Money Warrant giving them the right to buy into a future $1 billion Ethiopian bond, or, if Addis Ababa prefers, a flat $90 million cash payment instead. The IMF reviewed those terms and found them consistent with the country's debt sustainability targets, and roughly 45 percent of outstanding bondholders had already signed on by late June.

None of this touches most of what Ethiopia owes. The IMF put the country's external debt at $28.9 billion in mid-2024, and more than half of it sits with multilateral lenders — the IMF, the World Bank, the African Development Bank — that stand outside any restructuring. Official bilateral creditors hold $12.4 billion of the rest, with China alone owed $7.4 billion and Saudi Arabia more than $1 billion. The Eurobond and a handful of state-enterprise loans, including from China's export credit agency, make up roughly a tenth of Ethiopia's total external debt.

What the restructuring buys further out is re-entry. A government locked out of Eurobond markets since its 2023 default cannot borrow there again until the matter is resolved, and bondholders accepting a warrant tied to a future Ethiopian bond is itself a wager that the country will be creditworthy enough within a few years to issue debt they would want to buy.

Friday's assessment is not the final word. The full committee still has to sign off, and the government has said only that it plans to finalise the remaining terms before launching a formal exchange offer in the coming months.