Senegal Eurobonds Extend Losses After Moody’s Ratings Cut
Senegal’s eurobonds extended losses on Monday after Moody’s Ratings cut its credit rating further into junk status, and placed it on watch for further downgrade.
The country’s dollar bonds maturing in 2033 fell a fourth day by 0.3 cent to 84.97 cents on the dollar at 1:01 p.m. in London. Notes due 2048 suffered a similar losing streak, dipping by 0.4 cent to 72.77 cents on the dollar.
Moody’s on Friday reduced the West African nation’s long-term foreign currency ratings to B1, four steps below investment grade, from Ba3. The ratings agency said the decision was driven by recent revelations by the new government that fiscal and debt position during the last five-year term of the previous administration was significantly weaker than previously assessed.
Senegal’s bonds have been among the worst performers in emerging markets since the findings from the audit by newly-elected President Bassirou Diomaye Faye were announced last month. The results show a budget deficit of 10% of gross domestic product in 2023, almost double the 5.5% reported by the previous administration.
“Senegal’s elevated debt burden, estimated by the preliminary findings at 83.7% of GDP in 2023 at the central government level – around 10 percentage points higher than the previously published ratio – reduces shock-absorption capacity and increases susceptibility to higher funding costs,” Moody’s said.
Faye, 44, became Africa’s youngest elected leader when he won a landslide in March, defeating former prime minister Amadou Ba, the anointed successor of former president Macky Sall.
The new government plans to implement “ambitious reforms to significantly reduce the deficit” in the short term, it said on Saturday.
