Senegal’s planned restructuring of nearly $5 billion in Eurobonds is emerging as a major test of whether reforms to the G20 Common Framework can accelerate Africa’s sovereign debt workouts, making them faster, more coordinated, and less disruptive.
The stakes rose sharply after S&P Global Ratings cut the Western African nation’s long-term foreign-currency sovereign rating to ‘CC’ from ‘CCC+’, its lowest level since December 2000, warning that the government’s planned debt restructuring is highly likely to result in losses for foreign-currency creditors.
The downgrade underscores the pressure facing President Bassirou Diomaye Faye’s government as it seeks to restructure the debt following the discovery of more than $11 billion in previously undisclosed government liabilities under the previous administration.
S&P said the restructuring under negotiation could leave foreign-currency creditors receiving less than they were originally contracted to receive.
“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,” it said in a report on Friday
