NAIROBI, Oct 3 (Reuters) – A group of Ethiopia’s international bondholders rejected on Thursday the outlines of a government restructuring proposal for its $1 billion bond that was presented in an investors call earlier this week.

Ethiopia became Africa’s third default in as many years in December 2023. Progress on debt restructuring has been sluggish amid slow movement on reforms and drawn-out negotiations of a $3.4 billion programme with the International Monetary Fund.

During a call with global investors on Tuesday, the government sketched out “illustrative” terms of a bond restructuring, saying an 18% haircut – or writedown – on the nominal value of its sole outstanding dollar bond, excluding past due interest, would be compatible with debt sustainability targets.

“A haircut of the 2024 Notes principal claim is wholly inconsistent with the Committee’s evaluation of Ethiopia’s economic fundamentals,” the group of bondholders said in an emailed statement.

“As such, the Committee does not consider the illustrative terms to be a reasonable starting point for negotiation, a view that is shared by others in the wider bondholder community,” the group’s statement said.

A new bond issued to holders as part of the restructuring would have a 5% coupon and mature in June 2031, the government said in its presentation.

(Reporting by Duncan Miriri and George Obulutsa, editing by Karin Strohecker and Gareth Jones)