S&P cuts Senegal’s rating to near 26-year low after debt restructuring

S&P Global Ratings has cut Senegal’s long-term foreign-currency sovereign rating to CC from CCC+, warning that the government’s planned debt restructuring is highly likely to leave foreign-currency creditors with losses.

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The downgrade takes Senegal’s rating to its lowest level in nearly 26 years, reflecting growing concerns over the country’s ability to meet its debt obligations after billions of dollars in previously undisclosed government liabilities were uncovered in 2024.

The debt revelations, which emerged after a change in government, have sharply increased pressure on Senegal’s public finances and complicated efforts to restore investor confidence.

S&P said the restructuring currently under negotiation could result in creditors receiving less than they were originally promised.

“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 ratings agency said.

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S&P also said a distressed exchange or default involving Senegal’s foreign currency commercial debt was “extremely likely.”

The downgrade comes shortly after Senegal reached a staff-level agreement with the International Monetary Fund that is expected to pave the way for a three-year financing package of about $2.2 billion.

The IMF support is intended to help the government address fiscal imbalances and manage the fallout from the undisclosed debt.

S&P also lowered Senegal’s long-term local currency rating to CCC from CCC+, its second downgrade of the local currency rating this year. The agency maintained a negative outlook, indicating that further pressure on the country’s credit position remains possible.

Moody’s has also raised concerns over Senegal’s finances, downgrading its sovereign ratings in late August amid rising refinancing risks and limited room for the government to reduce its debt burden.

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The rating cuts come as Senegal negotiates with creditors over the terms of its debt restructuring. Investors will closely watch the outcome, as the treatment of existing creditors will likely determine how quickly the country can restore fiscal credibility and regain sustainable access to international capital markets.

While the proposed IMF programme could provide much-needed financing and policy support, Senegal faces the difficult task of balancing debt restructuring with efforts to rebuild confidence in its economy.