LONDON, Sept 1 – Senegal’s international bonds fell to record lows on Tuesday as investors awaited an expected update from the International Monetary Fund on the country’s long-running debt crisis and the prospects for renewed financial support.
The government’s dollar-denominated bond maturing in June 2031 fell about 1.2 cents to 50.4 cents on the dollar, its lowest level on record, according to Tradeweb data. Other Senegalese international bonds, issued in both dollars and euros, also declined as investors positioned ahead of the expected IMF statement.
Leo Morawiecki, an investment manager at Aberdeen, said the weakness reflected market anticipation that the government could use the IMF announcement to indicate that a restructuring of its debt may be necessary.
The IMF mission comes as Senegal continues to deal with the fallout from the discovery in 2024 of billions of dollars in previously undisclosed public debt. The revelation significantly altered assessments of the country’s fiscal position and contributed to the suspension of a $1.8 billion IMF financing programme.
The disclosure also triggered a series of sovereign credit-rating downgrades and complicated the government’s ability to secure financing for its budget, increasing pressure on authorities to reach a new arrangement with the Fund.
An IMF team has been holding discussions with Senegalese officials in Dakar over measures to address the fiscal and debt problems. According to Reuters, talks have been described as constructive, with a source familiar with the discussions saying “positive developments” were expected when the mission concluded on Tuesday.
Investors are particularly focused on whether the IMF will provide a waiver relating to Senegal’s previous debt misreporting. Morawiecki said such a move could clear an important obstacle to negotiating a new IMF-supported programme and help establish a framework for addressing the country’s broader debt problems.
A waiver would be significant because renewed IMF engagement could improve Senegal’s access to external financing and provide greater clarity over the government’s fiscal adjustment plans. It could also influence how investors assess the sustainability of the country’s outstanding debt and the potential terms of any restructuring.
For bondholders, however, the prospect of a restructuring remains a central concern. The sharp decline in Senegalese bonds shows that markets are already pricing substantial uncertainty around the government’s ability to meet its obligations under existing terms.
The outcome of the IMF mission is therefore likely to be closely watched by investors and creditors. A clear path towards renewed IMF support could provide some relief to Senegal’s financial markets, while indications that a debt restructuring is unavoidable could deepen pressure on the country’s international bonds.
