S&P Downgrades Senegal's Rating Over Debt

Rating agency S&P downgraded Senegal’s sovereign credit rating to “CC” with a negative outlook on Friday following a major financial agreement between the West African nation and the International Monetary Fund (IMF).

The downgrade arrived shortly after the IMF announced a $2.2 billion loan deal designed to assist Dakar with its mounting debt crisis.

S&P warned that the restructuring parameters linked to the IMF package significantly elevate the risk of default on the country’s commercial obligations.

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The agency specifically pointed to the government’s planned debt renegotiations, noting that foreign currency creditors will likely suffer material losses.

S&P explained that the expected debt restructuring will force lenders to accept reduced principal, lowered interest rates, or extended payment terms.

S&P downgrades Senegal rating over debt (News Central TV) — A street vendor is pictured on a street in Pikine, on the outskirts of Dakar, Senegal, on February 1, 2019. Credit: Reuters

Consequently, analysts view a distressed debt exchange or outright default on Senegal’s foreign currency commercial debt as extremely likely in the near term.

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Abisoye Adeyiga

Abisoye Adedoyin Adeyiga holds a PhD in Languages and Media Studies and a Master’s in Education (English Language). Trained in digital marketing and investigative journalism, she is passionate about new media’s transformative power. She enjoys reading, traveling, and meaningful conversations.