Fitch downgrades Ethiopia further into junk territory as default looms

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Ethiopia’s credit rating was downgraded further into junk territory on Thursday by the Fitch Ratings agency, which cited an “increased likelihood” of default.

The east African country failed to pay a coupon on its single outstanding $1 billion Eurobond which had been due on 11 December, saying last week it could not make the payment.

Fitch cut Ethiopia’s rating to “C” from the “CC” it downgraded Africa’s second most populous country to last month.

The agency does not assign outlooks to sovereigns rated “CCC+” or below but said it would downgrade Ethiopia to “RD”, or restricted default, if it did not pay the coupon within a 14-day grace period.

Ethiopia’s economy is still reeling from high inflation, a hard currency shortage and growing external debt repayments more than a year after the federal government and rebel forces from the northern Tigray region signed a truce to end a two-year civil war.

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