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Summary of proposed guarantee

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.


Project name
Senegal Eurobond – Cross Currency Swap Arrangement
Project ID
Fiscal year
Guarantee holder
Standard Bank
Investor country
United Kingdom
Host country
Environmental category
Date SPG disclosed
July 01, 2011
Project Board date
August 04, 2011
Gross exposure
 $100.0 million
Project type
ESRS for Senegal Eurobond – Cross Currency Swap Arrangement

This summary covers a Euro – US dollar cross-currency swap arrangement between Standard Bank Plc (SB) and the government of Senegal. SB has applied for a MIGA guarantee of $100 million covering non-honoring of sovereign financial obligations for a period of 10 years. Senegal’s Ministry of Economy and Finance has entered into the swap with SB as a hedge against currency risk exposure related to the 10-year tenor, $500 million Senegal Eurobond (the bond) issued in May 2011. The MIGA guarantee will cover against a failure by the government of Senegal to honor the obligation to make a break-cost payment in the event of a premature unwinding of the Swap.

Given that part of the bond issue will relate to an exchange offer for outstanding notes under the government’s $200 million 2009 Eurobond issue (i.e. a “retirement” of the 2009 issue notes), the government will receive an approximate $300 million in net proceeds. The Senegalese government expects to use the net proceeds from the bond to finance future highly developmental infrastructure projects in the transport and energy sectors.

Environmental Categorization

At the time of MIGA’s due diligence, the investments to ultimately benefit from the bond proceeds have not yet been confirmed. However, the indicative preliminary list of energy and transport projects seem to suggest that they are generally projects with limited adverse social or environmental impacts that are few in number, site specific, largely reversible, and readily addressed, through mitigation measures with a majority of them likely to be categorized B. However, project categorization will be determined once the projects have been selected. APIX will be required to submit to MIGA any environmental and social impact assessments and other relevant reports for those projects supported by the bond proceeds, which will be reviewed and disclosed by MIGA.

Click here to view the Environmental and Social Review Summary.

Development Impact

The projected development impacts of Standard Bank’s proposed swap arrangement with the government are twofold. The direct benefits relate to: the elimination of the currency mismatch risk the government of Senegal is exposed to under the Eurobond, which removes a potential source of instability to the government finances; improved terms on the Swap (meaning a more favorable EUR coupon rate), which implicitly contributes to a more effective cost of servicing the USD Eurobond; and the release of capital arising from reduced risk weighting for Standard Bank on this exposure, the benefits of which will likely be used for additional developmentally beneficial projects in the country.

Indirect benefits of the investment will relate to the government of Senegal’s commitment to use the net proceeds from the Eurobond to finance infrastructure projects in the energy and transport sectors. This may include the anticipated extension road project to connect the Dakar-Diamniadio Toll Road (currently under construction) to the new Blaise Diagne International Airport. Consistent with the Policy Support Instrument agreed with the International Monetary Fund, the government has committed that the Eurobond proceeds will be deposited in a special account to ensure that it is used exclusively for such types of projects in the indicated sectors.

The proposed project is aligned with MIGA’s priorities of supporting investments in infrastructure and investments into countries eligible for concessional lending from the International Development Association.

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