Senegal Eurobonds Jump as Sall Seeks Vote by End of March

(Bloomberg) -- Senegal’s dollar bonds advanced after the authorities announced that delayed elections will take place this month, days before President Macky Sall’s mandate expires.

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The plan to hold the vote before the end of March removes the risk of a power vacuum in the West African nation. A panel of Senegalese leaders had proposed the ballot be held on June 2 and that Sall — who is obliged under the constitution to step down on April 2 — remain in power until a successor is appointed.

Sall on Wednesday dissolved his government so that his chosen successor former Prime Minister Amadou Ba could focus on the campaign and said the ballot would go ahead on March 24. Senegal’s top court initially sought March 31 for the vote but later aligned with Sall’s decision “in order to resume the election process” and hold the vote “before the end of the president’s term,” it said.

The yield on Senegalese dollar debt due in 2033 fell 27 basis points to 8.54% by 4:46 p.m. in London, having reversed almost all of its losses since Sall triggered investor uncertainty on Feb. 3 when he cancelled the election. The rate on bonds due 2048 fell 21 basis points to 9.29%, its lowest since Jan. 15.

“The initial eurobond market reaction to the March 24 election date seems constructive as a perceived institutional risk premium related to earlier plans to delay the election recedes,” said Samir Gadio, head of Africa strategy at Standard Chartered Bank. “Beyond this bounce, some cautious bond investor positioning may still persist as focus shifts to the outcome of the election and its potential policy implications.”

The West African nation has been in political limbo since Sall called off elections originally scheduled for Feb. 25. He sought a 10-month delay to allow for an inquiry into the process of selecting presidential candidates, after some of them who were barred from taking part, questioned the vetting process. The move sparked violent protests and a crackdown by the government on the opposition and the media.

The sparring over the election date has scarred Senegal’s reputation as one of Africa’s most stable democracies and weighed on investor sentiment. Its bonds have been among the worst emerging-market performers this year, except for the past week when they posted some gains. The country is on the verge of becoming an oil and gas producer, and the International Monetary Fund expects its economy to expand more than 8% in 2024.

Read More: Senegal’s Dollar Bonds Rise After New Election Date Announced

S&P Global Ratings warned last month that prolonged political uncertainty in Senegal risked undermining the implementation of the country’s so-called Plan Senegal Emergent, which seeks to boost private investment and stabilize government finances. The company rates the country’s long-term debt at sub-investment grade B+, with a stable outlook.

(Adds top court confirmation in third paragraph.)

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