Senegal's Sovereign Dollar Bonds Plunge Amid Revelations of Higher Debt

Senegal's sovereign dollar bonds experienced a significant drop after a government audit uncovered larger debt and deficit figures than previously reported. The new administration's findings led them to refrain from requesting a disbursement from the IMF, resulting in a nearly 2-cent decrease in bond values.

Senegal's sovereign dollar bonds experienced a sharp decline on Friday following a government audit that unveiled significantly higher debt and deficit figures than those reported by the previous administration, according to Tradeweb data.

By 0720 GMT, the 2033 maturity bonds had fallen nearly 2 cents to 84.93 cents on the dollar, while the 2048 issue also saw a 2-cent drop. The audit, commissioned by President Bassirou Diomaye Faye's new government, disclosed that the deficit at the end of 2023 exceeded 10%, in stark contrast to the 5% reported by the prior administration, as stated by economy minister Abdourahmane Sarr late Thursday.

Due to these revelations, Faye's administration opted against requesting a disbursement from the International Monetary Fund (IMF) in July under the $1.8 billion, three-year lending program, to maintain compliance with IMF regulations, Sarr explained. Discussions on the path forward between the government and IMF are ongoing, although the IMF has not yet provided a comment.

(With inputs from agencies.)