S&P cuts Ethiopia

S&P said it downgraded Ethiopia’s ratings to CCC+ from B-, removed the rating from CreditWatch negative, and assigned a negative outlook.

“We estimate public debt service requirements at about $5.5 billion over 2021-2024, including $66 million in annual eurobond interest payments and a $1 billion eurobond bullet repayment due in December 2024. These high refinancing needs exceed the country's gross FX reserves of about $2.9 billion,” S&P said in a press release.

The IMF also stopped disbursements under its three-year (2019-2022), $2.9 billion Extended Credit Facility (ECF)-Extended Fund Facility (EFF) program due to delays to the process of restructuring the government's official debt, under the G20's common framework, adding more pressure on the country’s ability to repay its external debt, the agency said.

“The negative outlook captures the risk that we could lower the ratings on Ethiopia over the next 12 months due to increasing pressures on the availability of government external funding, as well as the potential inclusion of commercial creditors in the government's debt restructuring plans,” S&P said.

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