S&P Global Ratings declared that Ethiopia made a selective default after the government missed a coupon payment Monday and announced it wouldn’t pay it within the grace period.
The country’s finance ministry said last week Ethiopia was “not in a position” to cover the $33 million payment because of the nation’s “fragile external position.” S&P also cited ongoing discussions with bondholders as a reason for the downgrade.
“We view the nonpayment of interest and the statement that the government would not honor its debt service obligations within the stipulated grace period as a default on its external commercial debt,” analysts Giulia Filocca, Zahabia Gupta and Ravi Bhatia wrote.
Fitch Ratings downgraded Ethiopia to C, one notch above default on Thursday, while Moody’s Investors Service assigns the nation the fourth lowest score with a stable outlook.
