Senegal’s dollar bonds sink as investors await election outcome
TLDR
- Senegal's dollar bonds saw a decline in performance in the emerging-market credit sector due to speculations surrounding the potential victory of an opposition candidate in the presidential election.
- Bonds maturing in 2048 experienced a significant surge in yield to 9.93%, with a price drop to 71.702 cents on the dollar, while the yield on notes due in 2033 increased to 9.36%.
- Multiple presidential candidates, including Bassirou Diomaye Faye, have received vocal support for the position of the nation's next leader, despite pending official election results.
Senegal’s dollar bonds were among the worst performers in emerging-market credit on Monday as investors weighed the chance of an opposition candidate winning the presidency after an election on Sunday, per a Bloomberg report.
The yield on bonds maturing in 2048 surged by 12 basis points to 9.93% as of 8:30 a.m. in London, with their price dropping to 71.702 cents on the dollar. Similarly, the yield on notes due in 2033 increased by 19 basis points to 9.36%, reaching the highest level since November, resulting in a decline in price to 81.75 cents.
While the Autonomous National Electoral Commission has yet to release official results, at least 10 of the 19 presidential candidates have voiced their support for opposition leader Bassirou Diomaye Faye as the nation's next leader. Furthermore, despite the absence of official confirmation, candidates such as Anta Babacar and Alassane Thierno Sall have congratulated Faye on his apparent victory, as indicated in statements shared on X (formerly Twitter).
Key Takeaways
The presidential election in Senegal has garnered close attention from international investors, particularly following delays that sparked widespread protests. Senegal has about $4.2 billion of outstanding international bonds, two issued in euros and three in U.S. dollars. For investors in those bonds, the current focus is on whether the presidential vote will be peaceful and fair. Bassirou Diomaye Faye emerged as the primary opposition candidate after the disqualification of the outspoken leader Ousmane Sonko, who was convicted of libel. Faye, a former tax inspector with no prior experience in public office, has put forward several key campaign promises. These include plans to renegotiate mining and energy contracts with private companies, advocate for reforms in the management of the regional currency, the CFA franc, and address issues related to public debt renegotiation and the cancellation of private debt.
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