Ethiopia Reaches Deal with Bondholders on Debt Repayment

Ethiopia has reached an agreement to pay 99.375 million dollars to cover three missed interest payments on its international bonds. The deal includes a 0.5 percent consent fee based on the original face value, along with 10 million dollars in committee work fees and related advisory expenses. A key component of the agreement is a 'New Money Warrant,' which grants bondholders the right to subscribe to a future bond issuance worth up to one billion dollars. This potential future bond would carry a coupon rate 4.5 percentage points above the six-year US Treasury yield, estimated at approximately 9.44 percent annually. Alternatively, the Ethiopian government retains the option to redeem the warrant for up to 90 million dollars in cash.

This agreement is a significant step in managing Ethiopia's sovereign debt obligations. By settling the arrears and providing new instruments, the government aims to normalize relations with international creditors and stabilize the country's external debt position. The terms reflect the ongoing efforts by the authorities to navigate complex financial negotiations amidst broader economic reforms.