Fitch cuts Ethiopia local rating

Fitch Ratings said it dropped Ethiopia’s long-term foreign-currency rating to RD, restricted default, from C and its $1 billion eurobond to D from C.

The downgrade follows the government not paying the $33 million payment due on the $1 billion bond that was due by Dec. 25, which was the end of the 14-day grace period, Fitch said.

The government held a global investor call on Dec. 14 to explain its situation. “The government hopes to reach an agreement on a restructuring with bondholders ahead of a common framework (CF) debt treatment,” Fitch said in a press release.

The agency said it also affirmed the long-term local-currency issuer default rating at CCC-. “It has given no indication that it plans to include domestic debt in any debt restructuring. However, the CCC- rating reflects the significant risk of default arising from heightened macroeconomic imbalances and liquidity strains.”

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