Investor confidence in Senegal’s financial outlook took a fresh hit on Monday as the country’s dollar-denominated bonds tumbled following sovereign credit downgrades by both S&P Global Ratings and Moody’s, driven by concerns over surging debt and fiscal transparency.
S&P Global lowered Senegal’s long-term foreign currency rating to ‘B’ from ‘B+’ on February 28, citing a “weaker-than-expected” fiscal position. The agency’s move follows a comprehensive audit revealing that Senegal’s debt-to-GDP ratio for 2024 had soared to 106%, a dramatic revision from the earlier estimate of 77%.
Bonds maturing in 2031 slipped 0.3% to 87.44 cents on the dollar, while longer-dated securities due in 2048 lost 0.2%, trading at 67.17 cents.
Analysts attribute the market reaction to the growing perception that Senegal may struggle to meet debt obligations without further international support or stronger fiscal reform.
The downgrades follow findings from the Court of Auditors that exposed previously unreported liabilities, particularly investments financed through external borrowing and domestic bank loans.
These hidden debts have sharply constrained the country’s fiscal maneuverability at a time when global financing conditions remain tight.
Moody’s issued its own downgrade just days earlier, slashing Senegal’s sovereign rating by two notches to B3. The agency flagged “a significantly higher debt burden and persistent governance challenges” as core reasons for its decision.
In response, bonds maturing in 2048 suffered a weekly decline of 0.7%, dropping to 68.94 cents on the dollar — among the steepest losses in African emerging markets this month.
While both agencies have attached a stable outlook to their downgraded ratings, the outlook could darken further if fiscal consolidation plans falter or debt service pressures intensify.
The deteriorating fiscal picture raises fresh questions about Senegal’s ability to tap global markets for future financing.
As the government attempts to stabilize the economy and reassure international lenders, investors remain cautious.
The downgrades serve as a clear signal: without decisive reforms and enhanced transparency, Senegal’s credit profile may face further erosion.
About The Author
