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Europe’s largest asset manager, Amundi, warned that current bond prices may underestimate the severe risks facing investors as Senegal prepares to restructure its debt.
The West African nation announced a financial recovery plan after revealing billions in previously misreported debt, pushing its total debt burden above 130 per cent of GDP.
To secure a $2.2 billion rescue package from the International Monetary Fund (IMF), Senegal must establish a sustainable debt trajectory.
Although Senegalese leaders claim they will reprofile rather than restructure by extending maturities and lowering interest rates, Amundi expressed scepticism regarding a light-touch outcome.
Sergei Strigo, Amundi’s head of emerging markets fixed income, argued that current bond prices in the low fifties do not reflect market realities.
Strigo emphasised that external commercial bondholders will probably bear the largest financial burden since Senegal intends to protect local CFA-denominated debt and multilateral lenders from adjustments.
An upcoming IMF debt sustainability analysis will determine the precise amount of relief creditors must provide.
In response to the looming negotiations, at least eight investment funds holding Senegalese bonds formed a formal creditor group and hired the law firm White & Case to represent their interests.
Amundi confirmed it holds both dollar- and euro-denominated Senegalese bonds and will consider joining the creditor coalition to navigate the restructuring process.
