Morocco Raises $3 Billion in Record Foreign Bond Sale

CASABLANCA (Capital Markets in Africa) — Morocco returned to international capital markets with a record foreign bond offering to shore up finances battered by the coronavirus.

The government’s $3 billion bond offering included dollar-denominated seven-, 12- and 30-year securities, according to a person familiar with the matter who asked not to be identified. The deal priced at 175 basis points over U.S. Treasuries for $750 million of the shortest-duration notes, 200 basis points for $1 billion in 12-year bonds, and 4% for the $1.25 billion in 30-year securities, the person said.

The deal marks the largest amount raised by the kingdom in a single international sale, according to data compiled by Bloomberg. It was Morocco’s second foreign bond sale of the year. Barclays Plc, BNP Paribas SA, JPMorgan Chase & Co. and Natixis SA were appointed lead managers of the sale, the person said.

The central bank, which usually keeps the market up to date on planned bond sales, had not said a new sale of such a high amount was planned.

As the sovereign was launching the sale, lawmakers held a vote that approved a budget bill for 2021, projecting its fiscal deficit would shrink to 6.5% versus 7.5% in 2020, providing that the economy rebounds 4.8% in 2021. This would stand to reverse course from a 7% contraction estimated by the International Monetary Fund this year amid declining tourism and export revenue, coupled with a drop in agricultural output.

The sale was Morocco’s first since Fitch cut the country’s debt rating to junk in October. S&P Global Ratings rates Morocco investment grade with a negative outlook.

Source: Bloomberg Business News