Market News

BY  Libby George

LONDON, Dec 4 (Reuters) – An external debt restructuring in Senegal is “increasingly likely” in the second half of 2026, Bank of America Global Research said in a note published on Thursday.

The West African country is struggling to manage billions in debts that the previous administration did not report, and is in prolonged talks with the International Monetary Fund about a new lending programme to help shore up its finances.

“We expect external debt moratorium and restructuring negotiations increasingly likely towards H2 2026,” the bank said. “Given the resiliency of the local market, a moratorium on external debt and subsequent restructuring negotiations appears most likely in late 2026.”

Senegal’s finance ministry did not immediately reply to an emailed request for comment.

The country’s bond prices shed as much as 2.25 cents by midday, with the 2031 dollar-denominated issue bid at a fresh record low of 62.67 cents.

Last month, Prime Minister Ousmane Sonko said the IMF wanted Senegal to restructure its debt, which he said would be “a disgrace” and Dakar has since repeated its pledge to pay back its debts and continue talks with the Fund.

BofA said robust regional debt markets could help the country muddle through without an IMF loan for a short time, but this could become untenable by the second half of 2026.

“To cover 2026 financing needs, it would need to raise 40% more than in 2025, which we don’t think is credible,” the bank said.

It pegged likely recovery value at $40 per $100 of pre-restructuring face value.

BofA said estimates showed Senegal had contracted $750 million to $1 billion “total return swaps” this year, backed by 1.3 to 1.5 times collateral in domestic debt. Such instruments often have trigger clauses that can force repayment, for example if a country’s credit rating is downgraded.

A triggering of total return swaps, BofA said, would exert “severe stress and potentially accelerate a restructuring scenario.”