The seven-year bond was issued through a private placement with qualified investors and carries a floating interest rate linked to the Moroccan Overnight Index Average.
The transaction forms part of the AfDB’s strategy to diversify financing available in Morocco beyond the euro and US Dollar.
Introducing dirham-denominated financing will allow the AfDB to offer borrowers funding more closely aligned with local-currency revenue and operational requirements.
The approach could also reduce the foreign-exchange risks faced by clients borrowing in international currencies while generating income in Moroccan dirhams.
AfDB is considering establishing a dedicated dirham treasury portfolio, which could be financed by converting part of the Bank’s foreign-currency liquidity.
The proposed portfolio would support the gradual expansion of local-currency lending in Morocco.
Local-currency financing is a strategic priority for AfDB as the institution seeks to provide African clients with financing better suited to domestic markets.
Morocco was selected for the pilot because of AfDB’s longstanding relationship with the country, the size of the Bank’s existing portfolio, demand for financing in dirhams and the maturity of the Moroccan financial system.
AfDB also plans to work with the Moroccan government and local market participants to develop hedging instruments and strengthen liquidity in the derivatives market.
Lessons from the transaction could guide the gradual introduction of bonds and financing instruments denominated in other African currencies.
The transaction resulted from cooperation among AfDB, Moroccan authorities and local financial-market participants.
AfDB thanked the Ministry of Economy, Finance and Public Performance, Bank Al-Maghrib and Moroccan Capital Markets Authority for supporting the issuance.
Attijari Finances Corporation served as financial adviser, while Attijariwafa Bank and CDG Capital acted as lead managers.
The one-billion-dirham issuance converts to approximately $102 million using the latest available Bank Al-Maghrib transfer rate of $1 to about 9.81 dirhams on October 30.
–ChannelAfrica–
