According to a senior official who spoke on the condition of anonymity, the government is on the verge of selling at least a billion dollar of sovereign bonds late in the year following the International Monetary Fund’s (IMF) support of $6,2 billion geared towards boosting its economy.
The bond is foreseen to be issued “probably in October” with the possibility of “some terms that can allow institutional investors from the Gulf Cooperation Council (GCC) to subscribe for around half the total” of it.
The last bond issued by the government two years ago raised almost a billion Euros. Morocco is hoping to “obtain better terms than the last issue” as it believes that the issuances of the bond in US dollars will open doors for the country “to tap the obvious advantage it offers” and it is more attractive to institutional investors from the Gulf Arab region the source said.
Morocco will be using the $6.2 billion obtained from the IMF last week, as a precautionary line of credit for over two years, to serve as “insurance” if the current economic situation should shift from bad to worse or sudden financing needs arises. It also thinks that the IMF credit should give comfort to foreign lenders, investors and rating agencies, and allow it to tap international capital markets at favorable borrowing terms.
The bond will be used to cushion the public investment budget deficit, push forward with the reforms and assure the continuity of subsidies. The country’s economy is undergoing a difficult time as doubts are raised about its capability to change the situation with its fiscal and current accounts in deficit. The country continues to struggle from the effects of its strong link to the troubled euro-zone.