Senegal has successfully raised 304.15 billion CFA francs ($537.60 million) through its first public bond issue of the year, securing interest rates as low as 6.40%.

The Senegalese Finance Ministry disclosed the details on Sunday in Dakar, following a month-long sale that concluded on March 26. The rates achieved are significantly lower than the nearly double-digit yields currently demanded by investors for Nigerian sovereign debt.

This successful fundraise is particularly striking given Senegal’s current financial isolation and a debt-misreporting scandal that has severed its access to funding from the International Monetary Fund (IMF) and other major global financiers.

The government originally set out to raise 200 billion CFA francs but was met with overwhelming demand from both individual and institutional investors, which the ministry noted serves as a “mark of confidence” in the country’s sovereign debt.

The sale, which ran for four weeks, featured four different maturities:

• 3-year bonds: Priced at an interest rate of 6.40%.
• 0-year bonds: Priced at an interest rate of 6.95%.

Despite the successful bond issue, Senegal continues to face severe economic headwinds. The West African nation has been forced to rely on the regional debt market and retail investors since last year, following a debt-misreporting case that stalled its relationship with the IMF.

The ministry recently revealed that the government utilized ‘Total Return Swaps’, a complex derivative, across seven operations between April and November of last year. These transactions have sparked intense scrutiny regarding the transparency of Senegal’s debt reporting and have complicated efforts to secure a new IMF program.

Further compounding these challenges, S&P Global Ratings recently slashed Senegal’s local currency rating from “B-/B” to “CCC+/C.” The agency cited “rising refinancing risks” and a dangerous dependence on short-term domestic debt as the primary reasons for the downgrade.

While Senegal’s raise was conducted in the regional CFA market, benefiting from the currency’s peg to the Euro, the 6.95% rate remains a stark contrast to the 9.1% yields Nigeria must pay to attract investors in the global Eurobond market.

In November last year, Nigeria raised $2.35 billion through Eurobonds, drawing a record-breaking $13 billion in orders. However, according to the Debt Management Office (DMO), Nigeria had to offer much higher yields to secure that capital:

• Nigeria’s 10-year note: Priced at a yield of 8.63%.
• Nigeria’s 20-year note: Priced at a yield of 9.13%.

While Senegal’s 10-year debt is costing the government 6.95%, Nigeria is paying nearly 200 basis points more for a similar maturity.