S&P cut Senegal’s long-term foreign-currency debt rating from CCC+ to CC and its local-currency rating to CCC, with negative outlooks on both. The agency considers a distressed exchange or default on foreign-currency debt extremely likely. The government’s debt treatment plan under the G20 framework excludes CFA franc obligations, which make up nearly a third of public debt.
S&P Global Ratings lowered Senegal’s long-term foreign-currency sovereign rating from CCC+ to CC. The long-term local-currency rating fell from CCC+ to CCC, with negative outlooks assigned to both. Short-term ratings remained at C. The decision followed the government’s announcement of the Senegal Debt Treatment Plan. The agency considers the process the government is pursuing with creditors to be a debt restructuring.[1], [2]
S&P considers a distressed exchange or default on Senegal’s foreign-currency commercial debt extremely likely. In the agency’s assessment, creditors may receive less than originally promised: principal may be reduced, interest payments lowered, or the terms and timing of repayment changed. S&P said it could raise the foreign-currency rating once a distressed exchange is effectively completed. Its next scheduled publication on Senegal is set for 25 September.[1]
The plan under the G20 Common Framework excludes debt denominated in CFA francs, which represents nearly a third of total public debt. Seneweb reports S&P’s estimate of annual refinancing needs at up to 29 per cent of GDP over the next three years. Short-term local debt has a substantial role in the country’s borrowing. Earlier in the week, the government reached an IMF agreement for a programme worth 2.2 billion dollars over 36 months.[2]
