The group "does not view any such haircut as being consistent with its evaluation of Ethiopia's economic fundamentals," it said via email, calling the government's recent public statements "incompatible with a good-faith approach to debt restructuring."

The government did not respond to a request for comment.

Ethiopia defaulted on its sole international bond in December and has made little headway in its restructuring since.

The country surprised bondholders by announcing plans earlier this month to reduce the bond principal to $800 million, indicating a 20% haircut, citing the need to match debt relief offered by official creditors.

The creditor group, which says it holds more than 40% of the bond in aggregate, called for transparency and public disclosure of any assumptions made with the input of official bilateral creditors.

The East African country initially requested a debt rework with official creditors in early 2021 under the G20 Common Framework restructuring process, but a two-year civil war, which ended in a truce in late 2022, delayed progress.

Ethiopia had secured an agreement with the International Monetary Fund for a new $3.4 billion financing program in July.

The government at the time said it planned to finalise the debt restructuring before the first review of its programme with the Fund. According to the IMF statement, initial reviews of its loan programme will be held on a quarterly basis.

The IMF did not respond to a request for comment. Its criteria for good faith negotiations include timely dialogue and sharing of relevant information as well as the opportunity for input from creditors.

The $1 billion Eurobond fell 0.75 cent on Wednesday, trading at 77 cents on the dollar, according to LSEG data. It makes up only a small part of Ethiopia's total external debt.

The IMF estimates that as of end-June, external debt stood at $28.9 billion, around half of which it owed to multilateral lenders such as the IMF, World Bank and African Development Bank.

Of the $12.4 billion owed to bilateral lenders, China accounts for $7.4 billion and Saudi Arabia just over $1 billion. The country owes under $2 billion to the Paris Club of rich creditor nations.

Ethiopia failed to reach an agreement in formal talks with investors late last year. The statement following the talks showed the country had proposed that bondholders swap the existing bond for a new $1 billion issue that would be paid off starting in 2028.

"There's no formal proposal out there so we don't know what the government intends," said Kevin Daly, portfolio manager at abrdn, which holds the bond but is not part of the creditor group.

He said a deal would probably be found somewhere between the previous government offer and the 20% haircut proposal.

Ethiopia has struggled for years with a foreign currency shortage. The IMF estimates its foreign currency reserves in 2023/2024 stood at half a month of import cover, well below the traditional rule of thumb of at least three months of imports.