After freezing the West African country's debt programme, the IMF and Senegalese government have provisionally agreed this week to a new $2.2 billion package.

The Senegal saga arose after the previous government revised the country's national debt upward significantly, revealing as much as $13 billion in hidden unmet liabilities, in 2024. In the midst of that crucible, a number of private total return swap (TRS) agreements with regional and international institutions were signed, but not immediately disclosed, adding a new, fascinating and unstable element.

Notably those derivatives, denominated in the regional local currency, CFA Francs, are now set be shielded from the restructure – a decision that will influence both how the workout will be arranged, and who is left to pay, after already roiling domestic politics and inviting a parliamentary inquiry.

Unsurprisingly, global credit ratings agencies have taken an axe to the country's Eurobonds, now trading near 50 cents on the dollar for 2037 maturity, with analysts citing not only the hidden debt but the opacity of those TRS transactions. The bonds' value improved only modestly following this week's announcement.

At that price some emerging markets investors have expressed hope, even tabbed a buying opportunity for the once-darling frontier market debt, on assumption of strong IMF engagement.

Exactly how (if at all) those swaps are treated remains a big question, one with potential precedent-setting implications for bondholders across several other large African markets that have similarly combined TRS with multi-laterals in recent years.