Senegal’s efforts to regain access to international capital markets are facing fresh obstacles as the war in Iran dampens investor appetite for riskier sovereign debt, according to financial analysts.
The West African economy has effectively been shut out of global bond markets since 2024, after the new administration uncovered about $7 billion in previously undisclosed liabilities accumulated under the former government. The revelation forced the suspension of talks with the International Monetary Fund (IMF) and sent Senegal’s borrowing costs soaring.
That backdrop has left the government increasingly dependent on the regional West African Economic and Monetary Union (WAEMU) debt market to meet its financing needs.
Senegal nonetheless continues to service its international obligations. Last week,Bloomberg reported that the country paid a $471 million installment on its foreign-currency bonds last week, signalling an effort to maintain credibility with international investors despite limited market access.
Regional market steps in
With global funding channels constrained, Dakar has turned aggressively to the regional market.
Issuance on the WAEMU public securities market has reached 1.1 trillion CFA francs ($1.9 billion) so far this year, the largest amount raised by any sovereign in the bloc, according to Bloomberg data.
Borrowing costs in the regional market remain far below yields on Senegal’s dollar bonds. Data from UMOA-Titres show that short-term Treasury bills maturing within a year have been issued at yields below 7%, while longer-dated notes of up to ten years have priced below 8%.
Yet the structure of that borrowing has shifted markedly toward shorter maturities.
Bloomberg estimates that bills accounted for 62% of Senegal’s WAEMU issuance during the first two months of 2026, up from 30% over the same period last year.
Leo Morawiecki, an emerging-market analyst at Aberdeen Plc, said the growing reliance on short-dated debt raises refinancing risks.
Market depth expanding
Senegal’s heavy presence in the regional market reflects both its financing needs and the growing depth of the WAEMU debt market itself.
The regional platform, which serves eight countries including Ivory Coast, Benin and Senegal, has expanded rapidly over the past decade as domestic savings pools and institutional investors have grown.
Jean-Claude Kassi Brou, governor of the Central Bank of West African States, said issuance on the regional public securities market rose 47% in 2025, reaching roughly 15% of the bloc’s economic output, up from 5.6% in 2014.
Fitch Ratings estimates Senegal alone accounted for 31% of WAEMU issuance last year, equivalent to about 2 trillion CFA francs, compared with 12% in 2024.
Demand has been sustained in part because Senegal is one of the largest economies in the monetary union.
“If Senegal defaults on its Eurobonds there can be some contagion via wider spreads,” said Dario Scheurer, a portfolio manager at Vontobel Asset Management AG, explaining why regional investors remain supportive of the country’s debt.
Buying time
For now, the strategy is helping Senegal avoid a near-term financing crunch.
Analysts say regional borrowing has effectively bought the government time as it seeks to restore an IMF programme and rebuild credibility with international investors.
But the room for manoeuvre may be narrowing.
Giulia Pellegrini, lead portfolio manager at Allianz Global Investors, said Senegal is still navigating the current environment but risks tightening its options if global conditions remain volatile.
“They can still muddle through,” Pellegrini said. “They’ve got regional funding as well, some international funding, but they’re working themselves into a tighter corner day by day.”
