- Bondholders are pushing to get paid over 50% more than Ethiopia’s government creditors
- These proposals could lead to bondholders making 100% profit
Ethiopia’s bondholders are pushing to get paid over 50% more than government creditors through participating in debt relief. New calculations by Debt Justice and Afrodad also show that bondholders could make over 100% profit if their proposals were accepted compared to if they had to lent to the US government instead.[1]
Negotiations between Ethiopia and its bondholders broke down in October 2025. Bondholders, including VR Capital and Farallon Capital Management, have threatened to sue Ethiopia in the UK as part of their tactics to make more profit from the restructuring.[2]
The Debt Justice and Afrodad calculations show that Ethiopia’s debt restructuring proposal, rejected by bondholders, could still mean the private creditors are repaid 33% more than government creditors, and make significant profits compared to lending to the US government. Ethiopia proposed a 15% haircut to the original $1 billion principal, alongside paying missed coupon payments in full, principal payments between 2026 and 2029 and an interest rate of 6.125%.
An addition to these terms, the bondholders are seeking a share of Ethiopia’s future exports without any cap, granting them potentially unlimited profit.
Tim Jones, Policy Director at Debt Justice, said:
“These speculators have rejected a deal which would make them large profits and be paid more than government creditors such as China. Instead, they are holding out and using the threat of legal action in the UK to secure maximum profits at the expense of the people of Ethiopia. The UK government must pass legislation to prevent any creditor suing during debt relief negotiations. No creditor should be allowed to bleed a country dry while grabbing more than other creditors.”
Catherine Mithia, Policer Officer, Sovereign Debt Management from Afrodad, said:
“This rejection by bondholders continues to reflect the persistent weakness of the G20 Common Framework in achieving creditor coordination, making it unimplementable. The absence of clear guidelines for assessment of comparability continues to leave participating borrower countries exposed to prolonged creditor holdouts and exposes the blatant greed of creditors and lack of attention to help countries return to a sustainable debt path. There is therefore a need for a rules-based approach to sovereign debt restructuring, independent of creditors’ influence, which is only possible through the establishment of a UN Framework Convention on Sovereign Debt.”
Notes
Debt Justice (formerly Jubilee Debt Campaign) is a UK charity working to end poverty caused by unjust debt through education, research and campaigning
AFRODAD is a Pan-African Civil Society organization that champions for responsible borrowing and lending; increased public participation in debt governance; and equalisation of power between creditor and debtor country governments in Africa.
[1] Debt Justice and Afrodad’s full calculations are available in a briefing at: https://debtjustice.org.uk/wp-content/uploads/2025/12/Ethiopia-debt-restructuring_12.25.pdf
And a spreadsheet at:
https://debtjustice.org.uk/wp-content/uploads/2025/12/Ethiopia-calculations_12.25.xlsx
A summary of the calculations is:
[2] https://www.reuters.com/world/africa/ethiopias-debt-restructuring-hits-impasse-bondholders-eye-legal-action-2025-10-14/ and https://www.ft.com/content/40c35ffd-fa86-445f-9c4c-dc434b61de25