Ethiopia Bondholders Disappointed By Proposed Bond Haircut
A group of foreign holders of Ethiopia’s $1 billion international bond said on Wednesday it was disappointed with recent government comments regarding a possible 20% principal haircut on their holdings.
The group “does not view any such haircut as being consistent with its evaluation of Ethiopia’s economic fundamentals,” it said via email, calling the government’s recent public statements “incompatible with a good-faith approach to debt restructuring.”
The government did not respond to a request for comment.
The comments set the stage for tense restructuring negotiations in the wake of Ethiopia defaulting on its sole international bond in December and has made little headway since.
The country surprised bondholders by announcing plans earlier this month to reduce the bond principal to $800 million, indicating a 20% haircut, citing the need to match debt relief offered by official creditors.
The creditor group, which says it holds more than 40% of the bond, called for transparency and public disclosure of any assumptions made with the input of official bilateral creditors.
The East African country requested a debt rework in early 2021 under the G20 Common Framework restructuring process, but a two-year civil war, which ended in a truce in late 2022, delayed progress.
Ethiopia had secured an agreement with the International Monetary Fund for a new $3.4 billion financing program in July.
The government at the time said it planned to finalise the restructuring before the first review of its IMF programme. According to the Fund, initial reviews will be held on a quarterly basis.
The IMF did not respond to a request for comment.
Negotiating in good faith is key for the progress of any country’s IMF programme, which includes timely dialogue, information sharing and the opportunity for creditor input.
Source: reuters
Via: norvanreports
