Ethiopia

Ethiopia's only international government bond slipped in price on Monday after credit ratings agency S&P Global Ratings downgraded it to "Default" after the east African country failed to make a key 'coupon' payment, Reuters reported. The $1 billion bond, which matures in December 2024 with a full principal repayment known as a bullet payment, dipped 0.4 cents on the dollar to 66.5 cents having jumped roughly 10% since the start of the month.

Ethiopia's government told bondholders on Thursday it was hoping to negotiate a rework of its single international bond quickly and was set to include a form of "loss reinstatement" provision for investors, three sources attending the call told Reuters. The global investor call was part of Ethiopia's eleventh hour push to resuscitate an overhaul of its $1 billion Eurobond after disclosing on Dec. 8 that it failed to reach an agreement with a core group of bondholders.

Ethiopia looks set to miss an interest payment due later on Monday on its December 2024 dollar bond, becoming the latest emerging-market sovereign to default on debt, Bloomberg News reported. The country’s finance ministry said on Friday, it was “not in a position to pay” the $33 million coupon because of the nation’s “fragile external position.” It added that “restricted discussions” it had held with a group of bondholders had thus far been unsuccessful.

Ethiopia's agreement with its bilateral creditors, other than China, to suspend debt payments until 2025 could be voided if the country does not secure an International Monetary Fund (IMF) loan by March 31, 2024, the Paris Club of developed creditor nations said, Reuters reported. The debt service standstill for 2023 and 2024, which the central bank governor says will save the country $1.5 billion, applies to loans agreed before Nov. 10.

The International Monetary Fund is in discussions with Ethiopian authorities, and any new program would require creditors' financial assurances, a spokeswoman said on Thursday, Reuters reported. The fund "welcomed" the progress toward restoring lasting peace in the East African country as well as the authorities' "homegrown economic reform agenda," said spokeswoman Julie Kozack in a scheduled press conference.

The International Monetary Fund said on Thursday it was continuing to engage on a technical basis with Ethiopia despite a worsening conflict in the country, but given uncertainty, it has not begun discussions on a potential IMF financing program, Reuters reported. IMF spokesman Gerry Rice told a news briefing that the Fund is watching developments closely in Ethiopia, as well as in Sudan. It is too soon to tell how political developments related to a late October coup will affect Sudan’s request for debt relief and potential IMF disbursements in 2022, Rice said.

Moody’s Investors Service cut Ethiopia’s sovereign credit rating for a second time since May, citing a delay in the nation’s planned debt restructuring and an escalating civil war, Bloomberg News reported. The company lowered the rating one level to Caa2, it said in a statement on Wednesday. Moody’s in March placed the country on review for downgrade, before cutting the rating two months later. The outlook is negative. The yield on Ethiopia $1 billion of Eurobonds climbed five basis points to a record 13.83%.

Ethiopia doubled the statutory reserve requirement for commercial lenders and increased the amount of foreign currency they must remit to the central bank, in an effort to rein in inflation, Bloomberg News reported. From Sept. 1, the reserve requirement will increase to 10%, according to Fikadu Digafe, the National Bank of Ethiopia’s vice governor in charge of monetary policy and its chief economist. Banks will also be required to transfer 50% of their foreign-exchange holdings to the central bank, compared with 30% previously, he said.

Ethiopia plans to restructure an additional $1 billion of debt as the government seeks to free up funds to support its economic recovery, Bloomberg News reported. Restructuring of the debt will provide a grace period of as long as six years and extend the maturity by 10 years, the Finance Ministry said in a report on its website. “$2.5 billion in principal and interest payment has been postponed for five years by commercial creditors under the first external debt restructuring scheme,” according to the report.

A group of creditors that bought Etihad Airways PJSC-linked bonds are preparing to auction $463 million of claims against insolvent airlines Alitalia and Air Berlin to recover some of their investment, Bloomberg News reported. The trustee of bonds issued by EA Partners I and II -- two special purpose entities set up by the Abu Dhabi-based carrier -- hired Barclays Bank Plc to arrange the sale, according to a statement. Potential buyers will be able to access documentation on June 21 and the auction will take place within two weeks, it said.