Ethiopia bondholder committee reaches restructuring accord on $880 million 2029 bond

Ethiopia's ad hoc bondholder committee said it has reached an agreement-in-principle with the country on the main financial terms of restructuring the 6.625% Notes due 2024. The committee, which said it represents about 45% of the notes, said the deal would include a new $880 million bond maturing in July 2029 and a New Money Warrant, giving each holder the option to subscribe for an allocation of a future bond under the agreed terms. The group said the structure is intended to provide cash-flow relief and upfront debt stock relief within Ethiopia's IMF (International Monetary Fund) programme while also supporting growth after that programme ends. It added that the IMF said the New Money Warrant is consistent with the programme and that the Co-Chairs of the Official Creditor Committee, or OCC (group of government creditors), said they do not object on comparability of treatment grounds, subject to wider OCC approval. The committee said it will continue working with Ethiopia and its advisers on final documentation and urged holders to independently assess the merits and risks of any anticipated proposal. In broader remarks, the committee criticized Ethiopia's sovereign debt restructuring process, the Common Framework, the IMF's debt sustainability analysis, and the OCC's comparability of treatment approach, arguing they prolonged Ethiopia's default and relied on outdated assumptions. It said Ethiopia entered default in December 2023 and has remained there for more than 2 1/2 years. A separate comment from Farallon Capital Management, LLC said committee members were not unanimous, and that Farallon believes the AIP's financial terms would give Ethiopia materially more debt relief than needed for limited near-term liquidity relief, though it said it would not on its own pursue a judgment for non-payment in the English courts in order to preserve the committee's functioning.