Ethiopia has suggested it may offer creditors new bonds maturing in 2031 as part of an effort to restructure its outstanding debt, according to details shared with private bondholders this week.
In a presentation on Tuesday, the East African nation's government outlined illustrative terms for a potential bond restructuring, including the issuance of new debt to mature in June 2031.
Ethiopia also outlined potential terms for bondholders, including an 18 percent haircut on outstanding debt and a new bond maturing in 2031 with a five percent coupon rate, Reuters reported, citing a presentation made by State Minister of Finance Eyob Tekalign.
The government said it expects to make "tangible progress" by December toward reaching an agreement in principle with creditor nations on restructuring its debt load.
"Once a memorandum of understanding is agreed, the Republic of Ethiopia will sign bilateral agreements with each creditor, reflecting the terms of the MoU," the Ethiopian government said in its presentation.
The potential 2031 maturity date signals Ethiopia's desire to extend maturities significantly to help put its debt on a sustainable path. The nation defaulted on its debt in 2020 and has been seeking an orderly restructuring under an IMF program.
Bondholders were told negotiations are meant to expedite the restructuring process in parallel with official creditor country talks. However, a group representing over 40 percent of private bondholders opposes any haircut and views Ethiopia's problem as liquidity-driven rather than a solvency issue.
Reaching agreements with all creditors by year-end, as Ethiopia hopes, could be a major step in resolving its debt crisis and allow further disbursements from its USD 3.4 billion IMF loan program aimed at stabilizing Ethiopia's public finances.
As of today, Ethiopia's one billion dollars bond was down 0.2 cent at 77.2 cents on the dollar, Tradeweb data showed.
