S&P Cuts Senegal's Rating to 'CC' on Likely Foreign-Currency Debt Losses
S&P downgraded Senegal to 'CC', citing high odds of losses for foreign-currency creditors in the ongoing debt restructuring.
Global rating agency S&P has downgraded Senegal's long-term foreign-currency sovereign rating to 'CC' from 'CCC+', signaling that the government's planned debt restructuring will likely impose losses on international creditors.
The downgrade comes amid a deepening fiscal crisis in the West African nation, which was aggravated last year by the discovery of billions of dollars in undisclosed debt accumulated under the previous administration.
S&P stated that the ongoing renegotiation implies foreign-currency creditors will receive less than originally promised, whether through reduced principal, lower interest, or altered payment terms. The agency described a distressed exchange or outright default on Senegal's foreign-currency commercial debt as "extremely likely."
Earlier this week, Senegal reached a staff-level agreement with the International Monetary Fund (IMF), expected to unlock a $2.2 billion three-year loan package. The agency also cut Senegal's local-currency rating to 'CCC' from 'CCC+', marking the second downgrade this year, while maintaining a negative outlook.
The move follows a similar action by Moody's, which downgraded Senegal's sovereign ratings in late August, citing rising refinancing risks and limited room for debt reduction.