Morocco to Sell EU1 Billion Bonds by Early 2014, Minister Says

Morocco is planning a bond sale of about 1 billion euros ($1.35 billion) this year or early 2014, Finance Minister Mohamed Boussaid said.

“We recruited banks that will help us structure and realize the operation, we have legal advice,” Boussaid, who has been in the job for less than six weeks, said in an interview today in Washington. “Morocco today is credible on international markets.”

The kingdom, which has escaped most of the political unrest that has spread through its North African neighbors since 2011, last year received a $6.2 billion credit line from the International Monetary Fund. Boussaid said that has helped reassure foreign investors.

The yield on the nation’s October 2020 bonds denominated in euros has dropped about 45 basis points in the past year, to 4.16 percent today. In the same period, yields on similar-maturity bonds rose more than 60 basis points in Tunisia and more than 220 basis points in Egypt, data compiled by Bloomberg show.

Morocco is selling conventional bonds, not sukuk, as a law on Islamic financing has not yet been passed, he said.

Morocco is currently the only country with a so-called Precautionary and Liquidity Line from the IMF. The new type of loan comes with fewer strings attached than usual, though countries must pre-qualify to obtain it. Boussaid said the government may renew the funding next year “in this form or another.”

He said Morocco is determined to succeed in implementing its IMF-backed program. The government is seeking to reduce subsidies to narrow the budget deficit as a share of gross domestic product.

The minister, who’s part of a delegation accompanying King Mohammed VI to the U.S., predicted a gap of between 5 percent and 5.9 percent, compared with an earlier forecast of 5.5 percent. He said Morocco’s economy will grow about 4.8 percent this year, with inflation below 2 percent.

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