Ethiopia Becomes Latest Sovereign Default, 3rd Africa’s Nation Fails To Pay $1 Billion Bond

Ethiopia Becomes Latest Sovereign Default, 3rd Africa’s Nation Fails To Pay $1 Billion Bond

Ethiopia became Africa’s third default in as many years on Tuesday after it failed to make a $33 million “coupon” payment on its only international government bond.

Africa’s second most populous country announced earlier this month that it intended to formally go into default, having been under severe financial strain in the wake of the COVID-19 pandemic and a two-year civil war that ended in November 2022.

It had been supposed to make the payment on Dec. 11, but technically had up until Tuesday to provide the money due to a 14-day ‘grace period’ clause written into the $1 billion bond.

See also  Odds in Siminalayi Fubara's favor, Predictions Suggest Ahead of Rivers Governorship Election

According to two sources familiar with the situation, bondholders had not been paid the coupon as of the end of Friday Dec. 22, the last international banking working day before the grace period expires.

Ethiopian government officials did not respond to requests for comment on Friday or over the weekend, but the widely-expected default will see it join two other African nations, Zambia and Ghana, in a full-scale “Common Framework” restructuring.

See also  Make Shifts/ Illegal Structure: Lagos State Govt Close Mandilas Market

The East African country first requested debt relief under the G20-led initiative in early 2021.

Progress was initially delayed by the civil war but, with its foreign exchange reserves depleted and inflation soaring, Ethiopia’s official sector government creditors, including China agreed to a debt service suspension deal in November.

On Dec. 8, the government said parallel negotiations it had been having with pension funds and other private sector creditors that hold its bond had broken down.

See also  Kingsley Moghalu, Apologizes To Obidients Over Comment On “unlettered and uncultured” People

Credit ratings agency S&P Global then downgraded the bond, to “Default” on Dec. 15 on the assumption that the coupon payment would not be made.

Reporting by Rachel Savage and Karin Strohecker, Additional Reporting by Dawit Endeshaw in Addis Ababa, Editing by Marc Jones and Aurora Ellis

LONDON, Dec 26 (Reuters) –

Related post

FCT Residents Join Their Hungry Counterparts To Loot NEMA Warehouse In Karimo

FCT Residents Join Their Hungry Counterparts To Loot NEMA…

Face by hunger, some residents of the Federal Capital Territory (FCT), on Sunday morning, looted a warehouse belonging to the National…
Say No To Drugs: How Keke Rider Became Mad, Shortly After Allegedly Smoking Colos, Rushed To Hospital

Say No To Drugs: How Keke Rider Became Mad,…

It was a dramatic scene in Awka, the Anambra State capital, as a young man identified as Kingsley Uzodimma collapsed and…
Veteran Nollywood Comic Actor, ‘Mr. Ibu’ Passes On, Aged 61

Veteran Nollywood Comic Actor, ‘Mr. Ibu’ Passes On, Aged…

Veteran Nollywood actor, John Okafor, popularly known as Mr. Ibu is dead. This is coming less than 24 hours after the…

Leave a Reply

Your email address will not be published. Required fields are marked *