Madar (Dakar) - Rating agency Moody's says the bond exchange that could accompany the restructuring of Senegal's external debt would "very probably" be treated as a default under its criteria, Bloomberg reported on Friday, 6 November 2026, according to Senegalese news site Dakaractu on Saturday.
Lucie Villa, a senior vice president at Moody's, explained that under the agency's methodology a debt exchange is considered a "distressed exchange" when creditors receive securities or commitments worth less than under the original contract and the operation allows the borrower to avoid a default that had become likely, even if interest due has been paid on time. Senegal was still meeting its bond payments when Bloomberg's dispatch was published, according to the same source.
The warning follows Moody's decision on 29 October to cut Senegal's long-term foreign-currency rating from Caa2 to Ca, the second-lowest level on its scale, while affirming the local-currency rating at Caa2 and changing the outlook from negative to stable. The agency puts potential losses for private external creditors at between 35% and 65%, according to Bloomberg.
The Senegalese government launched a debt treatment plan on 1 September, following an audit of public finances that revealed the scale of the debt, and announced its intention to use the G20 Common Framework for its external debt, excluding CFA franc-denominated borrowing from the operation.
On the markets, the yield on Senegalese bonds exceeded that of US Treasuries by about 1,469 basis points according to a JPMorgan Chase index, above the 1,000-point threshold commonly used to signal distressed debt, while the cost of five-year default protection had risen by more than 33% since 1 September, according to figures cited by Bloomberg.
Dakar has two interest payments due on dollar bonds before the end of the year: on 23 November on the bond maturing in 2033, and on 10 December on the 2031 bond, estimated by Dakaractu at about $34.4 million and $40.7 million respectively.
This comes amid a budget dispute: the National Assembly on 3 November rejected the amended 2026 finance bill, which cut the growth forecast from 5% to 2.7% and raised the deficit from 5.4% to 7.6% of GDP, and the dispute has extended to the 2027 budget.
The IMF announced on 1 September a staff-level agreement with the Senegalese authorities on financing of about $2.2 billion over three years, which still requires approval by the Fund's executive board. Speaking to Bloomberg, Villa said a prolonged budget deadlock could push back the board's decision.
