Moody’s Changes Outlook on Morocco’s Ba1 Rating to Stable From Negative

CPI Financial provides analysis on Morocco’s recent bond rating improvement by Moody’s Investors Service. Morocco’s Ba1 government bond rating moved from ‘negative’ to ‘stable’, noting impending subsidy & pension reforms, the expected adoption of a new Organic Budget Law, and the government’s industrial growth strategy:

CPI Financial

Bank al-Maghrib. Photo: Alan Cordova

Bank al-Maghrib. Photo: Alan Cordova

The key drivers of the decision to change the outlook to stable are as follows:
1) The implementation of the government’s energy subsidy reform, which improves the structure of fiscal and external accounts;
2) The government’s industrial policy agenda, which promotes higher value-added export industries, particularly in the offshoring, automotive and aerospace industries, and is funded by significant foreign direct investment (FDI).

The affirmation of Morocco’s Ba1 rating balances the expected peak in the country’s debt/GDP in 2015 and significant ongoing borrowing requirements with its easy access to funding. Moody’s has also kept all rating ceilings unchanged, namely the foreign-currency bond ceiling at Baa2/P-2, the foreign-currency deposit ceiling at Ba2/NP, and the local-currency bond and deposit ceiling at Baa1.

The first driver of Moody’s decision to change the outlook on Morocco’s government bond rating to stable from negative is the implementation of the government’s energy subsidy reform. This reform is facilitating structural adjustments to the fiscal and external accounts and helping to reduce the large twin deficits that the government accumulated in the aftermath of the Arab Spring. The formation of these deficits was the key driver for the negative outlook assignment in February 2013…[Full Story]


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