On Friday 30 January official creditors including China and France rejected a debt restructuring deal between Ethiopia and its bondholders, saying it was a “very low restructuring effort“.[1] Debt Justice has previously estimated that under the deal bondholders would be repaid 28% more than official creditors.[2]
A committee of Ethiopia’s bondholders, led by VR Capital and Farallon Capital Management, said this morning that they will sue Ethiopia in response:
“The Committee [of bondholders] considers the determination, led by the OCC’s co-chairs France and China, to be completely unreasonable … In light of the OCC’s determination, and in the absence of a viable path forward, the [bondholders’] Committee believes they have been left with no other option but to take legal action in the English court to enforce payment of the outstanding principal and interest due.”[3]
Reacting to the news, Heidi Chow, Executive Director of Debt Justice, said:
“Official creditors were right to reject the deal with bondholders, which would have forced the people of Ethiopia to pay far too much, putting essential public services at risk. The UK must now step up and urgently defend Ethiopia by passing legislation in support of international debt relief agreements. A private members bill is already before parliament which would prevent legal action during debt restructuring negotiations and ensure no creditor can claim more than other lenders.”
The Debt Relief (Developing Countries) Bill is awaiting its second reading in the UK House of Commons,[4] but has not been given parliamentary time by the UK government.
Notes
[3] https://www.cnbcafrica.com/2026/ethiopia-bondholders-say-occ-objection-unreasonable-eye-legal-action
[4] https://bills.parliament.uk/bills/3889 More detail on the Bill is available here:
https://debtjustice.org.uk/wp-content/uploads/2025/07/The-lower-income-country-debt-crisis.pdf
https://debtjustice.org.uk/wp-content/uploads/2025/12/Legislation-FAQs_12.25.pdf