Senegal’s National Assembly Sets Up Cross-Party Inquiry Into Controversial Total Return Swap Deal; IMF Mission to Dakar to Complete Sept. 1

Senegal’s National Assembly last week voted to set up a cross-party parliamentary inquiry into Dakar’s use of total return swaps, or TRS, according to a statement.

“This parliamentary commission of inquiry will notably have to determine the conditions of [TRS operations], its costs and risks, verify whether state assets or revenues from natural resources were used as collateral and assess its impact on public debt and relations with technical and financial partners,” the statement reads.

TRS deals, where a country offers its own debt instruments – in many cases, local bonds – to a lender as collateral for a synthetic loan, have become a favored tool for countries who are locked out, or priced out, of the traditional eurobond market. However, the transactions have also drawn controversy, with critics arguing that they lack transparency, complicate the capital structures of vulnerable countries and would create novel dilemmas in the event of a restructuring, as reported.

Earlier this year, Senegal’s Finance Ministry confirmed that the country had entered into seven TRS transactions between April and November of 2025, for a total of 721 billion West African CFA francs ($1.26 billion), collateralized by about XOF 1 trillion of its own XOF-denominated debt securities.

Assembly members unanimously ratified the draft legislation establishing the inquiry, with 129 in favor, zero abstentions and zero against. The inquiry was initially put forward by Aïssata Tall Sall of Takku Wallu Sénégal, according to local media outlets. Takku Wallu Sénégal is the opposition group led by former Senegalese president Macky Sall, during whose tenure Senegal racked up billions in undisclosed debt, prompting the IMF to suspend the country’s $1.8 billion program in 2024 after the new government disclosed the hidden debt.

The session was chaired by National Assembly speaker and former prime minister Ousmane Sonko. Once the committee members are appointed, the inquiry will have six months to present its findings to Sonko, according to Bloomberg.

The inquiry comes as an IMF mission is in Dakar for discussions with authorities “toward reaching a shared understanding of the policies and reforms that could be supported by an IMF lending arrangement,” according to the Fund. The mission has been ongoing since Aug. 19 and will wrap on Sept. 1.

An IMF spokesperson recently told Octus “further details are needed” to understand the impact of Senegal’s TRS transactions on the structure of its public debt.

“We remain engaged with the Senegalese authorities and continue to emphasize the importance of transparency, sound debt management practices, and a comprehensive assessment of all liabilities to support fiscal sustainability and accountability, and investor confidence,” they said.

Senegal’s 4.75% €667 million 2028 bond has fallen roughly 3 points in the past 15 days to be quoted at 56.4/57.4, down from a recent high of more than 59 on Aug. 10. Senegal’s longer-dated 2031 and 2037 bonds have also slipped two or three points in the same period to around 51.5/52.5, while its longest-datest 2048 bond is down by about the same amount to 49.6/51.6, according to Solve.