Senegal is embarking on a debt restructuring process as a condition for a new $2.2 billion program from the International Monetary Fund (IMF). The government announced its intention for a "debt treatment" under an enhanced version of the G20 Common Framework on September 1, after the discovery of over $11 billion in previously undisclosed borrowing inflated its debt burden to approximately 130% of GDP. The IMF agreement still requires approval from its management and executive board, as well as financing assurances from other international partners.
The restructuring is expected to primarily impact international bondholders, as Senegal has indicated that CFA franc-denominated domestic debt will be excluded. As of the end of 2024, more than $7 billion in international bonds were outstanding. The details of the reprofiling, including the "haircut" or reduction in value, maturity extensions, interest-rate changes, and the treatment of different creditor classes, are yet to be published by Dakar. This uncertainty is heightened by the lack of clarity on how Senegal will organize the vote across its five outstanding international bonds, specifically whether collective-action and amendment provisions will allow for an aggregated vote or require bond-by-bond approval.
Compounding the complexity is the fragmented nature of Senegal's bond ownership, with investors including active funds, banks, pension funds, and index-tracking investors. Previous analyses of bond ownership, such as a Debt Justice analysis from April 2026 based on June 2025 data, are no longer precise due to changes in the debt stock. The government also entered into seven total return swap transactions between April and November 2025, totaling about 721 billion CFA francs in net financing, with associated overcollateralization of roughly 278 billion CFA francs. The treatment of these derivatives, which offer different contractual protections than conventional Eurobonds, will be an important issue in negotiations.
Rating agencies have already reacted to the announcement, with Moody's downgrading Senegal's sovereign rating to Caa2 in August 2026 and estimating private creditor losses of between 10% and 20%. S&P Global Ratings further cut Senegal's credit score to CC from CCC+ on September 4, 2026, with a negative outlook, stating that a distressed debt exchange or default on foreign-currency commercial debt is "extremely likely" bloomberg.com. Following the government's announcement, Senegal's international bonds fell below 50 cents on the dollar or euro, indicating investor expectations of substantial reductions in the value of their claims africabusinessinsight.com. Citi also identified the West African Development Bank (BOAD), the African Export-Import Bank, the Africa Finance Corp., and Ecobank Transnational Inc. as most exposed to corporate credit risk under the planned debt treatment bloomberg.com.
