DAKAR, Sept 12 – Senegal’s newly formed bondholder group is calling for a debt treatment that is equitable, sustainable and based on credible economic assumptions, setting the stage for potentially prolonged negotiations between Dakar and its creditors.
The group, known as an ad hoc bondholder group, said it wants any restructuring to reflect reasonable economic assumptions and appropriate policy adjustments by the Senegalese government. It has appointed international law firm White & Case as its legal counsel.
“It will be essential that the authorities work collaboratively with all stakeholders, including bondholders, to ensure the burden is fairly spread across Senegal’s financial creditors in accordance with best international practice,” the group said.
The creditors did not disclose the identities of its members or the amount of Senegalese debt they hold.
The group said its objective is to ensure that the eventual debt treatment is “economically justifiable, equitable and sustainable”, while being supported by realistic economic assumptions and credible adjustment measures.
The position signals a potentially contentious phase in Senegal’s efforts to restructure its public finances, particularly over how the costs of the restructuring will be distributed among different classes of creditors.
Senegal seeks enhanced debt restructuring framework
Senegal said last week that it plans to reorganize its debt, excluding obligations denominated in the regional CFA franc, after reaching a staff-level agreement with the International Monetary Fund on a three-year, $2.2 billion financing programme.
The restructuring is expected to be conducted through an “enhanced” version of the G20 Common Framework, which Senegalese authorities have said will involve a faster implementation process and greater engagement with creditors.
The government has committed to what it describes as a compressed implementation timeline, alongside earlier and more extensive information sharing and parallel consultations with creditors.
The approach will put the Common Framework under renewed scrutiny. Launched by the G20 in 2020, the mechanism was designed to help low-income countries restructure unsustainable debt through coordinated negotiations with official creditors.
However, the framework has faced criticism over the length and complexity of previous restructuring processes, including negotiations involving Ethiopia.
Senegal’s proposed approach seeks to accelerate that process while bringing private bondholders into consultations over the terms of the restructuring.
Financial crisis followed debt disclosure
The restructuring follows a financial crisis that emerged in September 2024, when Senegal’s newly elected government said it had uncovered billions of dollars in previously unreported debt accumulated under the previous administration.
The revelations significantly altered the country’s fiscal position and led the IMF to suspend its existing $1.8 billion lending programme.
The latest agreement with the Fund provides a new financing framework as Dakar attempts to restore fiscal credibility and address its accumulated debt burden.
For bondholders, however, the central question will be how much of the adjustment will be absorbed by private creditors and how the terms compare with those applied to other categories of Senegalese creditors.
White & Case brings experience from previous sovereign debt restructurings. The firm has advised governments including Ethiopia and Ukraine, while also representing creditor groups in restructurings involving Lebanon and Sri Lanka.
The formation of the ad hoc group therefore marks the beginning of a more formal phase of negotiations. Its insistence on equitable treatment and credible economic assumptions suggests creditors will closely scrutinize Senegal’s proposed adjustment programme before agreeing to any restructuring terms.
The outcome could also become an important test of whether an enhanced Common Framework can deliver a faster and more predictable restructuring process while achieving a balance between debt sustainability for Senegal and acceptable recovery outcomes for its creditors.
