Some investors offer Ethiopia Eurobond-Tenure Extension

Addis Ababa, February 24, 2023 (FBC) – An informal group of international bondholders has proposed to Ethiopia’s government to extend the maturity of the country’s $1 billion eurobond issue coming due in 2024, three sources with direct knowledge of the matter told Reuters.

The proposal involves the debt maturity being extended to 2029 or 2030 as well as an amortizing structure to avoid a big lump-sum payment at the end,

with the last five years seeing repayments of $200 million a year, said one of the sources, who like the others asked not to be named because talks are private.

Ethiopia in early 2021 requested a broader debt rework under the Group of 20’s Common Framework, an initiative for restructuring government debt aimed at low-income countries. 

The International Monetary Fund (IMF) said in a statement following a visit last June that a debt treatment under the G20 Common Framework was “essential to reduce debt vulnerabilities” for Ethiopia.

The sources said the proposal to extend the eurobond maturity foresees a coupon of 6.625% – the same as the current one on what was originally a 10- year bond that is the country’s only outstanding international note.

The next coupon payment on the 2024 bond is due in June, with the issue trading at around 68 cents in the dollar and yielding more than 30%, according to Refinitiv data. It has a long-term rating of CCC- from Fitch Ratings, which means it is a substantial credit risk with a real possibility of default.

International bondholders have not formed a private creditors committee for the extension proposal because Ethiopia has continued to service the bond normally, two of the sources added. Reuters