Senegal initiates $5 billion international debt restructuring

Senegal has initiated a debt restructuring process involving approximately $5 billion in international bonds. This move follows the country's request to certain foreign creditors to waive a portion of their dues, a process conducted under the supervision of the IMF, which has also granted the nation a $2.2 billion facility over three years.

Following the announcement, credit rating agencies downgraded Senegal, with Moody’s assigning a Caa2 rating and S&P issuing a CC rating with a selective default mention. Consequently, Senegalese bonds fell below 50 cents on the market.

To maintain liquidity, the government is distinguishing between external debt and debt denominated in CFA francs issued on the regional market. While international debt is being renegotiated, regional debt remains protected and will be paid normally. This strategy aims to support the local banking sector within the UEMOA zone, which provides essential financing for the state. Despite the international downgrades, Senegal successfully raised 101.3 billion CFA francs on the regional market shortly after the announcement.