Moody’s downgrades Sénégal’s credit rating

Moody’s has downgraded Sénégal’s long-term issuer ratings and senior unsecured foreign currency bonds from Caa2 to Ca on October 29, 2026. This downgrade places the country’s foreign currency debt in a particularly high-risk category and is expected to result in greater losses for foreign private creditors under the restructuring plan being considered by Dakar.

Previous downgrade and outlook change

This follows a previous downgrade less than two months earlier, and Moody’s raised the outlook attached to these ratings from "negative" to "stable." The change reflects its assessment of risks around the now very low rating level rather than an improvement in the country's solvency.

Sénégal initiates debt restructuring

Sénégal has initiated a process to address its debt following the discovery of public commitments that had not been properly declared under the previous administration. These revelations have significantly altered the evaluation of the state's finances and complicated its access to international financing.

G20-inspired debt resolution

In September, authorities announced their intention to address the debt within a framework inspired by the G20 Common Framework. Discussions involve holders of international bonds and lending institutions. On October 23, Reuters reported that a committee of creditor banks had chosen the firm Houlihan Lokey as financial advisor.

Ca rating signifies high risk

The Ca rating indicates an extremely degraded credit situation and the possibility of significant losses. The amount will depend on negotiations: principal reduction, interest modification, or extension of maturities can produce different outcomes for bondholders. No definitive markdown is determined solely by Moody’s decision.

IMF agreement and conditions

Sénégal is simultaneously seeking to secure multilateral support. The International Monetary Fund announced on September 1 an agreement covering a 36-month program of approximately 2.2 billion dollars. Its approval remains subject to conditions, including corrective measures related to previous erroneous declarations and financing assurances.

Monetary union and CFA franc

Sénégal belongs to the West African Economic and Monetary Union (UEMOA), whose central bank, the BCEAO, issues the CFA franc. The reference exchange rate published by the BCEAO remains fixed at 655.957 CFA francs per euro. This monetary structure is one of the factors that Moody’s takes into account.

Economic and financial implications

For French companies with commercial relations with Sénégal, banks, and investors exposed to its debt, the issue lies in the financing conditions of Sénégal's economy and the state's ability to meet its restructured commitments. The repercussions will depend on agreements reached with creditors and the continuation of economic activities, rather than a mechanical effect on rates or prices in France.

Negotiations and regional impact

The negotiation schedule and the IMF's decision will now determine the budgetary maneuverability of Dakar, in a region where public debt markets are closely linked among UEMOA member states.