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Senegal

Senegal Cross Currency Swap

$100.2 million
Capital Markets
Project Brief
Active

Project Facts

Project Facts

Project Facts

Senegal
Project ID
12514
Strategic Priority Area
IDA
Guarantee Holder
Citibank, N.A.
Standard Chartered Bank
Société Générale S.A.
Investor Country
France
United Kingdom
Environmental Category
A
Date SPG Disclosed
October 27, 2014
Projected Board Date
January 13, 2015
Project Type
Non-SIP
Fiscal Year
2016

 

Project description

On July 30, 2015, MIGA issued guarantees of $100.2 million covering a Euro – US dollar cross-currency swap arrangement between Citibank, Societe Generale, and Standard Chartered Bank and the government of Senegal. Senegal’s Ministry of Economy and Finance entered into the swap agreements as a hedge against currency risk exposure related to a 10-year tenor, $500 million Senegal Eurobond issued in July 2014. The MIGA guarantee covers risk against a failure by the government of Senegal to honor the obligation under the swap agreement.

The bond proceeds will be used to finance two road construction and expansion projects under the government’s 10-year multi-sector investment strategy, the “Emerging Senegal Plan.”

In 2011, MIGA issued coverage to Standard Bank for a similar swap agreement to help the government manage its exposure to volatility from currency fluctuations.

Development Impact
MIGA’s risk-mitigation instrument for the swap agreement reduces financing costs for the Government of Senegal by helping to manage its foreign currency exposure in relation to its obligations under the Eurobond. It also helps international banks manage their country limits in order for their subsidiaries in Senegal to continue to lend at their current levels, thereby facilitating access to credit in the local economy.

The Emerging Senegal Plan aims at increasing shared prosperity through accelerating growth and productivity, one of the pillars of the World Bank Group’s Country Partnership Framework for Senegal.

MIGA’s proposed support for the project is also aligned with the agency’s strategic priority of supporting investments into countries eligible for concessional financing from the International Development Association.