2023-12-27 01:50:09
Ethiopia has become Africa’s latest debt service default after it failed to make $33 million in interest payments following the end of a grace period on Tuesday.
The Ministry of Finance confirmed that the payment has not been and will not be paid. Ethiopia had reached an agreement with bilateral creditors last month to suspend debt payments.
The default puts Ethiopia among a growing number of developing nations that have defaulted on Eurobonds in recent years, including Zambia and Ghana.
In its restructuring counterproposal, the government asked bondholders to extend the repayment period from July 2028 to January 2032 and reduce the coupon to 5.5% from the current 6.625%. However, the nominal value is expected to remain at one billion dollars, which means that creditors will not need to endure a so-called haircut on their holdings.
An ad hoc committee of bondholders earlier this month said it considered the decision not to make the payment “unnecessary and unfortunate.”
Ethiopia is seeking to renegotiate its obligations through the Group of 20 Common Framework, which allows for the coordination of debt relief from public and private creditors, to establish standards for debt treatment. But progress on debt restructuring through the G20 Common Framework has been slow, as the cases of Zambia and Ghana show.
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