Ethiopia marked its third sovereign default within three years, as it encountered a challenge in meeting a $33 million “coupon” payment associated with its sole international government bond.
Earlier this month, the second most populous country in Africa declared its intention to enter formal default, citing substantial financial challenges exacerbated by the impacts of the COVID-19 pandemic and the conclusion of a two-year civil conflict in November 2022.
Initially scheduled for December 11, the payment deadline for Ethiopia’s $33 million obligation was extended until Tuesday due to a built-in 14-day ‘grace period’ clause embedded in the structure of the $1 billion bond.
After the last international banking working day before the grace period expiration, which fell on Friday, December 22, two credible sources disclosed that bondholders had not received the expected coupon payment. This delay in payment has raised concerns about Ethiopia’s financial commitments and its ability to fulfill obligations within the stipulated time frame.
Despite requests for comment made on Friday and throughout the weekend, Ethiopian government officials have not responded. The imminent and widely anticipated default positions Ethiopia to join the ranks of two other African nations, Zambia and Ghana, in undergoing a comprehensive restructuring within the framework of the “Common Framework.”