Senegal is targeting an agreement in principle with its official creditors and bondholders by December as the West African nation pushes ahead with a major debt restructuring following the discovery of previously misreported debt estimated at about $13 billion.
The government outlined its restructuring strategy during its first investor call on the country’s debt treatment plans, according to sources familiar with the discussions.
Senegal said it plans to seek debt treatment under the G20 Common Framework, while also calling for a “constructive contribution” from about 1 trillion CFA francs ($1.72 billion) in outstanding total return swaps (TRS).
The derivatives, which Senegal used to raise financing and which are backed by CFA franc government securities, are drawing particular attention because such instruments remain largely untested in sovereign debt restructurings.
Government documents identified First Abu Dhabi Bank, Africa Finance Corporation and Société Générale as counterparties to Senegal’s TRS arrangements.
The country’s Finance Ministry, Africa Finance Corporation and Société Générale did not immediately comment. First Abu Dhabi Bank said it does not comment on individual client relationships or transactions but reaffirmed its commitment to strong governance and regulatory compliance.
Senegal has maintained that CFA franc-denominated debt will remain outside the scope of the restructuring. However, the International Monetary Fund classifies the TRS obligations as external debt because the creditors are non-residents.
The government also disclosed that it had held discussions with official creditors, bondholders and banks holding non-bonded debt. The banks have reportedly established a committee to coordinate their negotiations as the restructuring process advances.
Under an enhanced Common Framework approach, Senegal is seeking to run parallel negotiations with official creditors and private-sector lenders while improving information sharing among the different creditor groups.
The December target will be closely watched as Senegal works to restore confidence in its public finances and establish a sustainable path for managing its debt obligations.
