Moroccan Bond Risk Drops to Three-Year Low on IMF Support Plans

Morocco’s credit risk fell to the lowest level in almost three years after the finance minister said the North African kingdom will seek to renew a $6.2 billion International Monetary Fund credit facility.

The cost of insuring Morocco’s dollar debt against default dropped 15 basis points yesterday to 178, the lowest since August 2011, according to data compiled by Bloomberg.

The IMF’s so-called precautionary credit facility, which expires in August, has helped Morocco through the euro crisis and political unrest gripping the Middle East since 2011. Gross domestic product is set to expand 3.9 percent this year before accelerating to 4.9 percent in 2015, according to IMF estimates.

“We have a desire to renew it and the IMF has expressed a desire to renew it,” Finance Minister Mohamed Boussaid said in an interview yesterday in Amman, Jordan. The facility “protects Morocco from external shocks,” he said.

The yield on Morocco’s $1.5 billion of bonds due 2022 was little changed at 4.38 percent, near the lowest since May 2013.

“Morocco weathered the impact of the Arab Spring, weakness in Europe and successive poor harvests well,” said Simon Williams, chief Middle East and North Africa economist at HSBC Holdings Plc in Dubai. “There is some difficult policy work still to be done and the poor rainfall this year is a worry. But the kingdom is structurally strong.”

Boussaid said while Europe remains the biggest source of foreign direct investments, the country is seeing a “big rise” in capital inflows from the oil-rich Gulf Cooperation Council.

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