Eurobond Restructuring Efforts Suffer Major Setback As Creditors Committee Rejects AIP

Ethiopia’s bid to restructure its USD one billion Eurobond debt has suffered a significant setback as its creditors committee rejects an agreement in principle (AIP) reached with bondholders earlier this month.

In a letter to Finance Minister Ahmed Shide, OCC co-chairs Yang Jing and Thomas Revial stated the AIP—which included terms for a 15 percent haircut, a new USD 850 million bond maturing in 2029, and a USD 350 million principal repayment due in July 2026—would be inconsistent with the official sector debt restructuring framework reflected in the MoU signed with the OCC in July 2025.

“After careful consideration of the agreement in principle (AIP), the OCC considers that it is not compliant with the principle of comparability of treatment and the MoU agreed with Ethiopia. In light of favorable macroeconomic perspectives, the OCC deems that the implementation of the AIP is likely to result in a very low restructuring effort from the bondholders, in breach of the comparability of treatment principle,” reads the letter.

In effect, they argue the agreement would be unfair to the rest of Ethiopia’s creditors.

The co-chairs also stated that “proceeding under these circumstances would pose risks to the macroeconomic stability and economic progress that Ethiopia has worked hard to achieve.”

The decision puts a screeching halt to Ethiopia’s efforts to restructure the terms of repayment on its Eurobond, which it defaulted on in late 2024.

However, Ethiopian authorities say they are determined to continue.

“While Ethiopia regrets the need to reopen discussions, it remains fully committed to working constructively and in good faith with the members of the Ad Hoc Committee and its official creditors to reach a solution,” reads a response from the Ministry of Finance.

The creditors committee says it is willing to work with the Ethiopian government on a solution consistent with the comparability of treatment principle, and compatible with Ethiopia’s commitments under the ongoing IMF program.