Ethiopia Strikes Preliminary Bond Restructuring Deal

Ethiopia's international bond rose following a preliminary restructuring deal with bondholders. The agreement involves a 15% writedown and requires IMF approval. The bond's value increased 2.8 cents to 110 cents. The bondholder committee will continue collaborating with Ethiopia to finalize non-financial terms.

Ethiopia's sole international bond experienced an uptick on Monday after the government secured a preliminary restructuring agreement with its bondholders, data from Tradeweb showed. The $1 billion bond rose by 2.8 cents to 110 cents on the dollar.

The deal was reached in a second round of negotiations that wrapped up at the start of January, following an initial round that stalled last September. It still requires approval from the IMF and Ethiopia's bilateral creditors and will offer bondholders a 15% writedown via a new $850 million note maturing in mid-2029.

The Ad Hoc Bondholder Committee, representing U.S. and European investors holding over 45% of the bond, confirmed compatibility with Ethiopia's IMF program. They emphasized ongoing efforts to agree on non-financial deal aspects. The government pledged to cover past-due interest if finalized while payments will link to export performance, potentially reducing the final payout by July 2029 if exports falter.

(With inputs from agencies.)