Senegal Eurobonds hit record lows as IMF talks stall and political rift widens.

Senegal’s hard-currency bonds slid to distressed levels after an IMF mission ended without a new program and political tensions intensified, raising concerns about financing access and default risk. Credit risk pricing surged, signaling investors are bracing for a potential restructuring in the absence of policy clarity and external support.

Euro- and dollar-denominated bonds fell by 2.5 to 3.0 cents, with the 2031s leading declines to 68.518 cents, taking maturities 2031 and longer below the 70-cent threshold commonly viewed as distressed. The cost of insuring Senegal’s debt jumped to 1,120 basis points so far this month from 750 at the start, underscoring deteriorating risk perceptions.

An IMF team concluded a Dakar visit last week without outlining a new support package, removing a key near-term anchor for market confidence.

Remarks from Prime Minister Ousmane Sonko rejecting what he described as IMF pressure for a debt restructuring accelerated the selloff, with investors interpreting the standoff as heightening policy and financing uncertainty. Portfolio managers noted that friction with the IMF jeopardizes both program approval and access to other multilateral funding, increasing the market-implied likelihood of restructuring.

The slide was compounded by a political dispute over leadership of the ruling coalition, with President Bassirou Diomaye Faye backing former Prime Minister Aminata Toure while the Pastef party affirmed Aissatou Mbodj, highlighting internal divisions despite denials of a power struggle.

Analysts warned that political fragmentation could weaken Senegal’s negotiating hand with the IMF, while previously undisclosed obligations revealed last year have pushed the debt-to-GDP ratio above 130%, constraining fiscal options and raising the stakes of adjustment. A research note from RMB cautioned that if necessary fiscal consolidation proves unmanageable, a restructuring could come sooner rather than later.

Prices below 70 cents and CDS above 1,000 basis points imply severe stress, tighter market access, and a higher probability of loss-given-default outcomes unless a credible policy path and external financing are secured quickly.

A stalled IMF engagement not only delays hard-currency inflows but may also restrict parallel multilateral support, elevating rollover risk and raising the cost of bridge financing for the sovereign and state-linked entities.

Political infighting risks undermining program conditionality, investor communication, and execution of austerity measures, potentially deepening the selloff across the curve and pushing issuance windows further out. For investors, the long end remains most sensitive to program headlines and coalition cohesion, while event risk around IMF statements and domestic policy signals will likely drive spread volatility and liquidity premia.

Absent rapid progress on an IMF-supported framework and clearer political alignment, market pricing suggests Senegal faces escalating refinancing challenges and rising restructuring risk, with policy credibility and external anchors central to stabilizing spreads.

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