Credit rating agency Standard & Poor’s on Friday cut Senegal’s long-term foreign-currency rating to “CC” from “CCC+”, citing a high likelihood that the government’s planned debt restructuring will result in losses for foreign-currency creditors.
Senegal’s finances have been under pressure since the 2024 discovery of billions of dollars in debt, hidden by a government no longer in charge of the West African country.
Earlier this week, Senegal reached an agreement with the International Monetary Fund that is expected to unlock a US$2.2 billion three-year loan package.
“In our view, this implies that the ongoing debt renegotiation will result in foreign currency creditors receiving less than originally promised, whether through a reduction in principal, interest, or payment terms,” the agency said in its report.
“We consider a distressed exchange or default on Senegal’s foreign currency commercial debt to be extremely likely,” S&P added.
Echoing S&P’s concerns, peer Moody’s also downgraded Senegal’s sovereign ratings in late August, citing rising refinancing risks and limited scope for debt reduction.
S&P on Friday also cut the West African nation’s local currency rating to “CCC” from “CCC+”, the second downgrade this year, while maintaining outlook at “negative”.
Reuters