LONDON (Reuters) - Orders totalled 2 billion euros for Morocco’s first euro-denominated bond since 2010, double the issue size, the finance minister said on Friday, but he added there were no plans for further international bonds this year.
Morocco launched the 1 billion 10-year Eurobond on Friday with a yield of 3.7 percent, tapping into growing demand for euro-denominated emerging market debt. [ID:nL4N0OU3T7] [ID:nL5N0OU238]
“Subscription totalled twice the issue size, it shows Morocco is well-recognised for its economic situation and political stability,” Mohamed Boussaid told Reuters.
Boussaid said Morocco had issued in the single currency to diversify its investor base, following dollar debt issues in recent years.
He said the country had no current plans to follow Britain, which on Friday mandated banks for an Islamic bond, the world’s first to be issued by a Western sovereign. [ID:nL4N0OU1LP]
“The sukuk market is definitely a market which is gaining significance, we are working on the jurisdiction for it,” he said, speaking partly through an interpreter.
Boussaid said Morocco had no need for more international issuance in the next few months due to support for Morocco from multilateral lenders such as the World Bank.
“There are no plans for this year,” he said.
GDP growth in Morocco would total between 3.5 and 4 percent this year, Boussaid added, below last year’s 4.4 percent rate due to a smaller harvest this year. Agriculture accounts for about 15 percent of Morocco’s gross domestic product.
The International Monetary Fund has encouraged Morocco to introduce reforms such as the cutting of fuel and food subsidies. Morocco ended subsidies of gasoline and fuel oil this year and has started to significantly cut diesel subsidies as part of efforts to repair public finances.
But Boussaid said that, unlike last year, the country had not entered into a hedging contract with banks to protect itself from rises in the price of oil.
Oil rose to a nine-month high near $115 a barrel on Friday, on supply disruption fears following escalating violence in Iraq.
Morocco had no need for the hedging contract due to its work in cutting subsidies, Boussaid said, though this left the economy exposed to higher oil prices.
“We are in the same position as all non-oil producing countries,” he said.