DAKAR, Mar 16 – Senegal is increasingly turning to regional debt markets for financing as the country remains largely shut out of international capital markets and seeks to restore support from the International Monetary Fund.
The government recently paid a $471 million installment on its foreign-currency bonds, according to a report by Bloomberg. The payment came after Senegal raised around 1.1 trillion CFA francs, roughly $1.9 billion, through the regional debt market of the West African Economic and Monetary Union.
This makes Senegal the largest borrower on the regional market so far this year.
While the WAEMU market has allowed Senegal to borrow at lower yields than its dollar-denominated bonds, analysts warn that the strategy may not be sustainable in the long term.
Leo Morawiecki of Aberdeen Plc said the country is showing warning signs as it increasingly relies on shorter-term debt instruments that will soon need refinancing.
Senegal’s dollar bonds currently trade at yields roughly 12 percentage points above U.S. Treasuries, the widest spread among African sovereign issuers according to indexes compiled by JPMorgan Chase.
By contrast, the country can issue debt in CFA francs on the WAEMU market at significantly lower borrowing costs.
Data from UMOA-Titres shows that Senegal issued short-term treasury bills in February at yields below 7%, while longer-term notes with maturities of up to ten years were sold at yields below 8%.
Short-term bills accounted for about 62% of Senegal’s issuance during the first two months of 2026, up sharply from 30% during the same period in 2025.
Rapid Growth of the Regional Market
The WAEMU debt market has expanded significantly in recent years as member countries deepen regional capital markets and build domestic investor bases.
The bloc includes Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo.
According to Jean-Claude Kassi Brou of the Central Bank of West African States, issuance on the regional public securities market increased by 47% in 2025 and now represents roughly 15% of the bloc’s economic output. That compares with just 5.6% in 2014.
Senegal alone accounted for about 31% of total WAEMU issuance in 2025, raising approximately two trillion CFA francs, according to a report by Fitch Ratings.
Fiscal Pressures Persist
The government in Dakar is seeking to restart its IMF programme after it was suspended in 2024 following the discovery of about $7 billion in previously undisclosed debt accumulated under the previous administration.
The debt includes roughly $5 billion in external loans.
Despite these pressures, Senegal’s large economic footprint in the region has helped maintain strong demand for its debt from regional investors such as pension funds and development banks.
Dario Scheurer said investors see Senegal as effectively too big to fail within the regional market, meaning buyers remain supportive even as borrowing increases.
However, analysts caution that the country’s strategy is narrowing its financing options.
Giulia Pellegrini noted that although African sovereign issuers have not panicked following the outbreak of conflict involving Iran, riskier governments are unlikely to access international dollar bond markets anytime soon.
A major concern among investors is Senegal’s intention to secure a new IMF programme without restructuring its existing debt.
Prime Minister Ousmane Sonko has rejected the idea of restructuring, calling it damaging to the country’s credibility and arguing that Senegal has continued servicing its debt obligations despite a tight repayment schedule.
Analysts say the government may continue relying on regional borrowing and other alternative funding sources to meet its financing needs in the near term.
Robert Besseling of Pangea-Risk said the strategy has provided temporary breathing room and helped avert the risk of near-term default.
However, he warned that heavy reliance on regional debt markets could become increasingly difficult to sustain over time.
