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Ethiopia Reiterates its Intention to Treat All Creditors Equitably

ADDIS ABABA – Ethiopia says the decision to withhold coupon payment on its Eurobond is to treat all creditors equitably as it continues to work on issues of debt resolution.

The East African nation withheld its December coupon payment of $33 million to its one billion USD Eurobond.

On Friday, the Ministry of Finance (MoF) held a Global Investor Call to update Ethiopia’s bondholders on its strategy towards external creditors on debt treatment, among others.

State Minister Eyob Tekalign led the one-hour session with more than a hundred participants to present a strategy for securing a Eurobond treatment related to its outstanding Eurobond.

Ethiopia is in debt relief talks under the G20’s Common Framework and has recently agreed to a debt service suspension with its official creditors ahead of negotiating more debt relief with them.

In a statement today, the MoF says it “is now seeking to ensure consistency and fairness” by requesting other external creditors, including bondholders, to partake in similar debt arrangements.

In this context, Eyob clarified that Ethiopia’s decision to withhold the December coupon payment on its Eurobond despite the amount being affordable, stemmed from the intention to treat all its external creditors equitably.

A failure to do so could indeed jeopardize ongoing discussions with other external lenders on the same matter, he said.

MoF ‘Open to A Loss Reinstatement Provision

Ethiopia’s strategy, as presented during the Call, is to invite bondholders to contribute early on – and likely once and for all – to the resolution of its debt issue.

“This would enable bondholders to hold a performing instrument and receive payments while the Common Framework process unfolds,” the statement reads.

The parameters of the debt treatment proposal are designed to minimize the risk of future adjustments due to concerns over comparability of treatment and non-compliance with the Debt Sustainability Analysis, per MoF.

The finance ministry says it is ready to discuss possible litigants, such as a loss reinstatement provision that would reinstate bondholders in their previous position should Ethiopia be required to renegotiate the terms of the agreement in the next two years.

The ministry further expressed its strong desire to reach an agreement swiftly with Ethiopia’s bondholders and restore normal relations with all creditors at the earliest opportunity.