JOHANNESBURG, June 29 (Reuters) – Ethiopia has struck a preliminary deal with key bondholders to restructure its defaulted $1 billion international bond, the finance ministry said on Monday, moving closer to resolving a years-long debt crisis.
The case is seen as a key test of the G20’s Common Framework, launched during the COVID-19 pandemic to streamline debt workouts but marked by divisions between Western lenders, China and private investors that have slowed and complicated restructurings.
Under the proposal, Ethiopia will issue an $880 million bond to be repaid in instalments through 2029 at a 6.15% interest rate, as previously agreed with bondholders. It will also pay $99.4 million in missed coupons and a consent fee.
The deal also includes a “New Money Warrant” giving bondholders the option to buy into a future Ethiopian bond of up to $1 billion at a market-linked interest rate. Ethiopia can choose to settle the warrant in cash instead, capped at $90 million.
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