DAKAR, Sept 5 – S&P Global Ratings has cut Senegal’s long-term foreign-currency sovereign rating to ‘CC’ from ‘CCC+’, warning that the government’s planned debt restructuring is highly likely to result in losses for foreign-currency creditors.
The downgrade reflects growing concerns over Senegal’s ability to meet its existing debt obligations following the discovery in 2024 of billions of dollars in previously undisclosed government liabilities. The debt revelation emerged after a change in government and has since intensified pressure on public finances.
S&P said the restructuring under negotiation could leave foreign-currency creditors receiving less than they were originally contracted to receive.
“In our view, this implies that the ongoing debt renegotiation will result in foreign currency creditors receiving less than originally promised, whether through a reduction in principal, interest, or payment terms,” S&P said in its report.
The ratings agency added that a distressed exchange or default involving Senegal’s foreign-currency commercial debt was highly probable.
“We consider a distressed exchange or default on Senegal’s foreign currency commercial debt to be extremely likely,” S&P said.
The downgrade comes shortly after Senegal reached an agreement with the International Monetary Fund that is expected to pave the way for a three-year financing package of about $2.2 billion. The IMF programme is intended to support the government as it addresses fiscal imbalances and works through the consequences of the previously undisclosed debt.
Senegal’s fiscal position has deteriorated significantly since the debt revelations, increasing refinancing pressures and complicating efforts to restore confidence among international investors. The government’s restructuring discussions are therefore taking place against a backdrop of constrained fiscal space and heightened scrutiny from credit-rating agencies.
S&P also lowered Senegal’s long-term local-currency rating to ‘CCC’ from ‘CCC+’, marking its second downgrade of the country’s local-currency rating this year. The agency maintained a negative outlook, signalling that further deterioration in the country’s credit position remains possible.
Moody’s has raised similar concerns. The rating agency downgraded Senegal’s sovereign ratings in late August, pointing to increasing refinancing risks and limited room for the government to reduce its debt burden.
The combination of the ratings downgrades and ongoing restructuring negotiations places Senegal at a critical point in its efforts to restore fiscal credibility. While the prospective IMF programme could provide significant external financing and policy support, the treatment of existing creditors remains central to determining the country’s path back towards sustainable debt management.
For investors, the immediate focus will be on the terms of any eventual restructuring and whether Senegal can implement the fiscal measures required under its IMF-supported programme. The outcome will also determine how quickly the country can regain access to international capital markets on sustainable terms.
