NASDAQ | Ethiopia’s sovereign dollar bonds dropped nearly 2 cents after Fitch downgraded the country to CCC, citing the government’s plan to make use of the new G20 common framework to overhaul its debt burden.

The country’s outstanding 2024 bond XS1151974877=TE dropped to as low as 92.06 cents in the dollar, according to Tradeweb data, trading close to record lows hit in late January when Ethiopia surprised markets with its announcement to seek debt relief.

“(This is) the first negative spillover from last week’s decision to go for the G20 Common Framework, a process that no eurobond issuer has been though yet, and one that could take some time, especially as private sector creditors have to be included,” said Simon Quijano-Evans, chief economist at Gemcorp Capital.

Fitch said earlier that the downgrade reflects the government’s announcement that it is looking to make use of the G20 framework, “which although still an untested mechanism, explicitly raises the risk of a default event.”

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