• Senegal launches a $247 million bond issue on the regional market as access to international financing narrows.
• The IMF has suspended its $1.8 billion program after uncovering $7 billion in hidden debt.
• With rising debt levels and downgraded credit ratings, the new government faces major financial challenges.

Senegal has launched a new bond issue on the regional market to raise CFA150 billion (about $247 million), as the country faces growing pressure on its public finances and limited access to international markets.

The bond sale, announced on March 26, is part of a broader strategy to rely more on local financing. The government is offering the bonds in four tranches, with maturities ranging from 3 to 10 years. Interest rates vary from 6.40% for the 3-year tranche to 6.95% for the 10-year. The largest slice, a 5-year tranche worth CFA70 billion, comes with a 6.60% rate. Investors can subscribe until April 18. The deal is being managed by Invictus Capital & Finance and is meant to help fill part of the 2025 budget gap.

This move comes at a tough time for Senegal. Just a day earlier, on March 25, the International Monetary Fund (IMF) confirmed the existence of $7 billion in previously undisclosed debt—accumulated between 2019 and 2024 under the former administration. These “off-the-books” liabilities include state guarantees, public enterprise debts, and public-private partnerships.

As a result, the IMF has frozen its $1.8 billion loan program with Senegal, saying that it won’t move forward until full audits are carried out and major fiscal reforms are put in place. A new cooperation deal won’t even be considered before June, according to sources familiar with the talks.

Investors did not take the news well. Senegal’s Eurobonds dropped sharply on global markets, and sovereign spreads widened. Credit rating agencies have also reacted: Moody’s downgraded the country to B3 with a negative outlook, and S&P followed by lowering Senegal from B+ to B, also with a negative outlook. Analysts say the country now faces a higher refinancing risk. Senegal’s public debt stood at around 76% of GDP at the end of 2023—but with the newly revealed liabilities, it’s now closer to 99.67%. The 2023 budget deficit, originally estimated at 4.9%, is believed to have actually exceeded 12%.

With the IMF on hold and international markets wary, Senegal is turning more to the West African regional market, which is seen as more stable and easier to access for now. The West African Economic and Monetary Union (WAEMU) allows its member countries to raise funds in CFA francs from local and regional investors. Senegal is targeting the syndicated segment of this market for its latest bond issue, while the more active auction-based segment, managed by UMOA-Titres, helped WAEMU countries raise nearly CFA3,000 billion in the first quarter alone. Côte d’Ivoire led that charge, securing over half of that amount.

Senegal raised CFA360 billion through this market in the first quarter and plans to raise another CFA250 billion in the second quarter.

“Senegal is offering coupon rates that are either in line with or slightly below market rates for bonds up to 7 years, but there’s a noticeable premium on the 10-year bond,” a market analyst said. “That shows they’re really trying to attract demand for the longer-term bond, which investors might otherwise avoid in this uncertain climate. It’s also a sign that the government wants to strengthen the long end of its domestic yield curve, especially now that access to Eurobonds is off the table due to the market discount.”

Still, there are limits to how much the regional market can absorb. Some experts warn that if too many countries flood the market—as is happening with Côte d’Ivoire—it could crowd out other public borrowers.

Senegal’s new president, Bassirou Diomaye Faye, and his prime minister, Ousmane Sonko, will need to make some tough budget decisions in the months ahead. Fixing the country’s finances, restoring investor trust, and getting back on track with the IMF are now among their top priorities.