By Radarr Africa Business Desk
LAGOS, November 2 (Radarr Africa) – Moody’s has downgraded Senegal’s foreign-currency sovereign rating from Caa2 to Ca, its fifth consecutive cut, and now expects losses of 35 per cent to 65 per cent for external private creditors under the debt restructuring that Dakar has planned, Ecofin Agency reported.
The rating action was taken on Thursday, October 29. Moody’s cut the long-term foreign-currency issuer and senior unsecured debt ratings and revised the outlook from negative to stable, according to Ecofin Agency. It kept the long-term local-currency issuer rating at Caa2.
The expected losses compare with 10 per cent to 20 per cent under the previous Caa2 rating, Ecofin Agency said. It noted that the figures are Moody’s estimates and not terms agreed in debt negotiations. The Rio Times said the range came from a summary relayed in Dakar because it did not have the full rating text.
Moody’s said the debt treatment under the G20 Common Framework could place a greater effort on investors than its earlier estimates, Seneweb reported, citing Les Echos and Reuters. Businessfront reported that private creditors are likely to suffer “larger losses than previously expected”. Financial Afrik described Ca as a level close to default on the agency’s scale.
Since September, Dakar has planned to restructure its external debt under the G20 Common Framework, excluding obligations denominated in CFA francs, Ecofin Agency reported. Those obligations make up about one-third of central government debt, which Moody’s puts at 97 per cent of gross domestic product. Excluding them shifts the burden towards other creditors, mainly international investors.
Moody’s considers the exclusion credible, because restructuring regional-market securities could cut off a financing source the Treasury relies on heavily, the report said. It warned, however, that CFA-denominated debt remains exposed to a liquidity crisis even if it is excluded.
Investors had already priced in heavy losses. In early October, Senegal’s five outstanding Eurobonds traded at about half their face value, Ecofin Agency reported.
Moody’s also flagged political and programme risks. It pointed to difficulties in securing parliamentary approval for measures required under an International Monetary Fund (IMF) programme, which could delay adoption and expected disbursements, and to growing tension between the executive and legislative branches. It said annual principal repayments are about 18 per cent of GDP, according to Ecofin Agency.
On September 1, the IMF announced a staff-level agreement on a 36-month Extended Credit Facility of about US$2.2 billion for 2026 to 2029, Businessfront reported. The programme still needs corrective actions, financing assurances and a decision by the IMF’s Executive Board.
The Rio Times reported that the National Assembly’s Finance Committee was due to consider revised 2026 budget bill No. 40 on Friday, October 30, after Finance Minister Cheikh Diba asked on October 27 for the bill to go back to committee. IMF Communications Director Julie Kozack said “a budget consistent with the parameters of the staff-level agreement is essential” for the programme to continue, the report said.
The rating pressure stems from the September 2024 disclosure by the government of President Bassirou Diomaye Faye of previously unreported liabilities, which the IMF estimated at more than US$11 billion and some analysts put closer to US$13 billion, Businessfront reported. IMF estimates put public debt at about 130 per cent of GDP at the end of 2024. The Fund suspended an earlier US$1.8 billion lending programme while it assessed the misreporting.
The Rio Times said Moody’s cut Senegal to Caa2 in late August 2026 and S&P moved the country to CC in September. It reported that the Treasury sold regional bills and bonds on October 23 at average yields above 8 per cent.
Creditors have organised. Eurobond holders hired Alvarez & Marsal as their adviser and creditor banks appointed Houlihan Lokey, and bondholders oppose potential principal reductions, so how the burden is shared remains the central dispute, Ecofin Agency said. Dakar aims to reach agreements with its main creditors before the end of the year.
Moody’s said membership of the West African Economic and Monetary Union (WAEMU) limits foreign-exchange risk and preserves access to regional capital markets, but does not remove Senegal’s fiscal pressures.
