Ethiopia moved closer to exiting default after its Official Creditor Committee (OCC) approved a preliminary agreement to restructure the country’s $1 billion Eurobond. The committee, co-chaired by France and China, said in a Friday statement that the draft deal with bondholders complies with comparability-of-treatment principles agreed with Ethiopia.
The OCC noted that the memorandum of understanding with Ethiopia had been respected, allowing the government to proceed with implementing the agreement. The restructuring follows multiple attempts to resolve the debt crisis, including an unsuccessful January proposal rejected by bilateral creditors for failing to meet agreed relief terms.
The preliminary approval comes after Ethiopia completed an external debt restructuring deal with bilateral creditors last year. The committee also raised concerns over a proposed 'New Money Warrant' in the bondholder agreement, warning that it could grant bondholders more favorable treatment than official creditors. This discrepancy may force bilateral creditors to adjust their terms to maintain parity, according to the OCC statement.
