Ethiopia: A billion dollar solution: Agreement in principle reached for restructuring the 2024s; expect recovery levels of ~110-113pts

Research evidence excerpt

Ethiopia: A billion dollar solution: Agreement in principle reached for restructuring the 2024s; expect recovery levels of ~110-113pts

Nishant M Poojary, CFA AC Africa Global Markets Strategy

(44 20) 3493-3859 01 July 2026 J P M O R G A N

nishant.m.poojary@jpmorgan.com

The proposal seeks to exchange the defaulted 2024s into new 2029s with a 12% haircut

and a new money warrant instrument. Figure 1Ethiopiaintendstoexchangeitsdefaulted2024Eurobondintoa2029bondwitha12%haircutandanewmoneywarantinstrument summarises the details of the exchange.

The proposed structure involves exchanging into a new bond (2029s) with a 12% nominal

haircut with some coupon relief. The new 2029s also have a staggered amortisation profile

and a long first coupon, with interest accruing from 11 December 2024. The exchange

proposal also includes a new money warrant instrument as a separate tradeable security in

addition to the bond. The instrument provides the holders with the right to subscribe to a

7-year eurobond of up to $1bn in face value in two years time on pre-agreed terms. As an

additional feature, the authorities could also opt to redeem the warrant at a redemption price,

with the maximum amount capped at $90m (9pts). We await more details on the calculations

behind the redemption price. The exchange also provides for a consent fee of 0.5% of the

original amount and 9.9pts of PDI upfront.

Figure 1: Ethiopia intends to exchange its defaulted 2024 Eurobond into a 2029 bond with a 12% haircut

and a new money warrant instrument

Details of the exchange

Original bond Exchange

New money warrant

Security ETHOPI 2024s ETHOPI 2029s

(detachable)

Rights to new issue

in the future of up to

Amount ($mn) 1000 880 (12% haircut) $1bn face value or

receive payment if

redeemed

PDI ($mn) 99.375 - -