Credit line

Morocco Set to Ditch Bond Market Yield, Could Use IMF Credit Line

(Bloomberg) — Morocco is set to suspend a planned sovereign bond issue this year and may use its line of credit with the International Monetary Fund instead, according to a person with knowledge of the matter, as the government seeks a cheaper solution. way to pay off debt maturing in December.

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The kingdom plans to draw about $1 billion from the IMF as the soaring cost of dollar debt makes borrowing unattractive this year, according to the person directly involved in the talks but not authorized to speak publicly.

Morocco previously planned its first issuance abroad since 2020 around the time its $1.5 billion bond matures in December. The central bank and finance ministry did not respond to emailed requests for comment.

The North African kingdom is among border sovereigns cut off from capital markets at a time when the US Federal Reserve has embarked on one of the most aggressive tightening cycles since the 1980s to fight inflation . Sales of dollar and euro-denominated government and corporate debt securities in emerging markets fell to their lowest level in more than a decade last month.

The central bank and the Treasury and External Finance Department of the Ministry of Finance will soon sign an agreement to withdraw funds from the IMF to help repay the maturing dollar bond, according to the person.

Morocco needs IMF financing to meet government fiscal needs and not because of concerns about its foreign exchange reserves, the person said.

The kingdom got $3 billion from the IMF under a so-called precautionary and liquidity line – credit that can be tapped if needed – in 2020 and later that year it repaid some less than a third of the amount.

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