Short-Term Appetite Drives Ethiopia’s Debt Market As Domestic Liabilities Hit 2.56 Trillion Birr

Ethiopia’s domestic debt stock climbed to 2.56 trillion by the end of September 2025, according to the latest debt bulletin from the Ministry of Finance.

The monthly publication indicates that the government raised 53.35 billion Birr from two auctions during the month, while the bulk of debt holdings remained concentrated among the Commercial Bank of Ethiopia, the National Bank of Ethiopia (NBE), and pension funds.

The bulletin, issued on October 28, 2025, provides a detailed snapshot of market activity up to the end of September and outlines the issuance plan for the second quarter of the 2025/26 fiscal year.

It reveals a domestic debt market that is both expanding and adjusting to investor sentiment favoring short-term instruments.

Two T-bill auctions held on September 3 and 17 generated total bids worth 56.46 billion Birr—almost six percent more than the 53.35 billion Birr offered, according to the report.

“Demand continued to favor short-term securities, with the 28 and 91-day bills oversubscribed due to stronger investor appetite for short maturities,” it reads.

On the other hand, the 364-day bill was significantly undersubscribed at only 36 percent, confirming a persistently weak appetite for longer tenures amid expectations of stable short term yields.

The Ministry document outlines that between July and mid-September 2025, T- bill yields displayed mixed movements across maturities, attributing the pattern to expectations of stable short-term yields and caution over longer-term commitments.

The 28-day rate fell from 15.8 percent to 12.6 percent, the 91-day rate saw a similar three-percentage-point decline to 15.3 percent, the 182-day rate dropped from 19 percent to 15.4 percent and in contrast, the 364-day rate rose from 15 percent to 20 percent.

The Ministry’s Debt Management Division observed that the bid-to-cover ratio for longer maturities has shown gradual improvement over the quarter, suggesting better alignment between issuance strategy and market preferences.

The report notes that net issuance reached 19.7 billion in the first quarter of the budget year. The government raised a total of 164.4 billion Birr through T-bill auctions over the three-month period. After deducting 126.1 billion Birr in refinanced maturities and 18.6 billion in rollovers, the net issuance amounted to 19.7 billion Birr.

The cumulative net issuance figure represents 11.4 percent of the annual net-issuance target of 172.9 billion, indicating the amount required to finance the funding gap by treasury is slightly below expectations.

Officials view the quarter’s performance as evidence of a “positive market response” and a “gradual improvement” in investor participation across maturities.

As of September 30, 2025, Ethiopia’s total domestic debt stock stood at 2.56 trillion Birr, marking another milestone in the country’s evolving debt landscape.

Treasury bonds dominated the composition, accounting for 79 percent of the total, while T-bills represented 11.3 percent. The remainder consisted of medium-term Development Bank of Ethiopia (DBE) instruments and other obligations, according to the Ministry.

The Commercial Bank of Ethiopia (CBE) held the largest share with about 43 percent of total domestic debt. It is followed by the NBE (26.3 percent) and pension funds (19.3 percent). Other financial institutions and insurers held the remainder.

Within the T-bill segment alone, 182-day and 364-day maturities made up 38 percent and 37 percent, respectively, of outstanding bills.  Pension funds and CBE each accounted for about 38.5 percent of total holdings, reinforcing their dominance as the primary buyers of government securities.

Other financial institutions accounted for 15.9 percent, insurance companies held 5.5 percent, and other institutions, including Ethiopian Investment Holdings, represented 1.7 percent, according to the report.

Looking ahead, the Ministry of Finance plans to issue 243.05 billion Birr in Treasury bills during the second quarter of the 2025/26 fiscal year—lasting from October 1 to December 24, 2025.

The planned volume is designed to refinance maturing obligations, meet domestic borrowing needs, and manage market liquidity, according to the Ministry. Auctions will continue on a biweekly basis, offering maturities of 28, 91, 182, and 364 days, maintaining the structure established in the first quarter.

The bulletin emphasizes predictability and transparency as guiding principles for issuance, aiming for “smooth refinancing of maturing obligations and consistent market operations.”