Ethiopia has reached a new preliminary agreement with a committee representing its Eurobond holders to restructure its US$1 billion sovereign bond, marking another significant step in the country’s ongoing debt restructuring efforts following its default in December 2023.
Announced on June 29, 2026, the agreement follows more than five months of negotiations and provides for the issuance of new Eurobonds worth US$880 million, representing a 12% reduction in the original principal. The new bonds will carry a 6.15% interest rate and will be repaid through annual installments between July 15, 2026, and July 15, 2029.
As part of the deal, Ethiopia will also settle three missed interest payments totaling US$99.375 million that were due between December 2023 and December 2024. In addition, bondholders will receive a consent fee equal to 0.5% of the original principal amount of the Eurobonds that matured in 2024.
The restructuring package includes a detachable New Money Warrant, giving existing bondholders the option to subscribe to a future international bond issuance of up to US$1 billion at a market-based interest rate. Alternatively, the Ethiopian government may choose to make a cash payment of US$90 million instead of issuing new bonds.
According to Ethiopia’s Ministry of Finance, the International Monetary Fund (IMF) has reviewed the New Money Warrant and determined that it is consistent with the country’s debt sustainability objectives. The proposal has also received no objection from the co-chairs of the Official Creditor Committee, China and France.
The agreement was reached with a committee representing approximately 45% of Ethiopia’s outstanding Eurobond holders. The government plans to finalize the remaining non-financial terms before launching a formal exchange offer in the coming months, subject to final approval from the Official Creditor Committee.
The latest agreement builds on Ethiopia’s broader debt restructuring process under the G20 Common Framework. In July 2025, the country secured a deal to restructure US$8.4 billion in debt with official creditors, while earlier proposals involving private creditors required further revisions to comply with international debt treatment principles. Ethiopia continues to pursue debt relief measures aimed at restoring fiscal stability, reducing its debt burden, and creating greater room for public investment and economic recovery.
