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Ethiopia dollar bonds drop after Fitch downgrade

·1 min read

LONDON, Feb 9 (Reuters) - Ethiopia's sovereign dollar bondsdropped nearly 2 cents after Fitch downgraded the country toCCC, citing the government's plan to make use of the new G20common framework to overhaul its debt burden.

The country's outstanding 2024 bonddropped to as low as 92.06 cents in the dollar, according toTradeweb data, trading close to record lows hit in late Januarywhen Ethiopia surprised markets with its announcement to seekdebt relief.

"(This is) the first negative spillover from last week'sdecision to go for the G20 Common Framework, a process that noeurobond issuer has been though yet, and one that could takesome time, especially as private sector creditors have to beincluded," said Simon Quijano-Evans, chief economist at GemcorpCapital.

Fitch said earlier that the downgrade reflects thegovernment's announcement that it is looking to make use of theG20 framework, "which although still an untested mechanism,explicitly raises the risk of a default event."(Reporting by Karin Strohecker; Editing by Tom Arnold)