By Kamlesh Bhuckory and Matthew Hill | Updated on Oct 06, 2026 at 09:13 AM
Senegal’s issue of a controversial swap could complicate its debt restructuring, according to S&P Global Ratings.
Senegal borrowed $1.2 billion from commercial banks using total return swaps that offer local bonds as collateral. It subsequently announced a reprofiling its debts using the Group of 20’s Common Framework, and the TRS lenders may claim seniority in the process.
That could mean there would be less to go around for unsecured creditors like holders of its eurobonds, suggesting they might have to take steeper losses as a result, adding an extra dimension to the negotiations.
“The total return swap does make it more complicated, which would likely extend the duration of the restructuring process,” Hanns Spangenberg, associate director, sovereign ratings Africa, said in an interview north of Port Louis, the Mauritian capital, on Tuesday. “Some creditors are going to say they want preferential treatment.”
Read More: How Total Return Swaps Pile on Risk For Bondholders: Explainer ·
The International Monetary Fund will host an initial information-sharing meeting later on Tuesday between Senegal and its creditors as the debt revamp gets underway, and more details may emerge.
“There might be precedents” set in Senegal’s debt rework when it comes to TRS, which are relatively new financing instruments for African governments, said Spangenberg. “It might take even longer because there will be consequences down the line for other restructurings.”
S&P Global Ratings cut the country’s credit score further into junk territory last month, saying a distressed debt exchange or default on the country’s foreign-currency commercial debt is “extremely likely” after the government announced the restructuring.
Its sovereign rating was downgraded to CC from CCC+ on Sept. 4, with a negative outlook.
“Where the market expects them to be unable to service their debt without restructuring, a committee is likely to interpret it as distressed, akin to a selective default in our world,” said Samira Mensah, managing director, national ratings and analytical solutions - Africa. “As such, it is likely that the ratings on Senegal will be lowered further.”
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