Senegal's Bonds Pare Losses as Fiscal Probe Spooks Investors

AFRICAN STOCKS AND FINANCESeptember 27, 2024 at 3:01 PM UTC

TLDR

Senegal's bond market experienced a selloff following the new government's investigation into the previous administration's fiscal accounts.
Yields on Senegal's 2048 sovereign notes increased by 34 basis points, reaching 9.68% before a partial recovery.
Analysts remain optimistic about the long-term outlook for Senegal's bonds despite concerns over financial transparency and public debt ratios.

Senegal's bonds faced a selloff on Friday after the new government announced a probe into the previous administration’s fiscal accounts, raising concerns about the country’s financial transparency.

Yields on the country's 2048 sovereign notes rose by 34 basis points before partially recovering to 9.68%. Despite the initial reaction, analysts see long-term optimism for Senegal’s bonds.

The review aims to determine whether the previous administration presented an unrealistic fiscal picture, especially regarding public debt, which Prime Minister Ousmane Sonko revealed to be 76.3% of GDP—significantly higher than the 65.9% reported under former President Macky Sall.

Points clés à retenir

Despite the fiscal concerns, analysts like Mark Bohlund of REDD Intelligence expect the outlook to improve if Senegal adheres to orthodox economic policies and secures IMF support. Senegal raised $750 million in Eurobonds in June, signaling international confidence in its economic prospects, which are buoyed by oil and gas development and strong institutions.

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