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IFC LAUNCHES DIRHAM BOND ISSUE IN MOROCCO First international institution to issue domestic Moroccan dirham bonds


In Washington
Adriana Gomez

Phone: +1 (202) 458-5204

Fax:      +1 (202) 974-4384

Email:
agomez@ifc.org


Washington, D.C., February 4, 2005. – The International Finance Corporation (IFC), the private sector arm of the World Bank Group, launched its dirham denominated bonds in the domestic Moroccan capital market.  The MAD 1.0 billion (approximately $117 million equivalent) bonds were targeted at domestic institutional investors.  The proceeds of the bond offering will be used for general operations of IFC.  

This transaction will further develop the Moroccan capital markets and will provide a benchmark for future high-grade issuers.  This transaction is the first bond offering by an international institution in MAD, and represents the first domestic bond offering by a supranational in Africa and the Middle East.  

The transaction has been listed on the Casablanca Stock Exchange (CSE) and was distributed using a Dutch auction system.  The 7 year bonds carry a coupon of 4.54% and were distributed to more than 20 investors, including insurance companies, mutual funds, and pension funds. The lead manager is Banque Marocaine pour le Commerce et l'Industrie (BMCI), the co-lead managers are Attijariwafa Bank and Caisse de Depot et de Gestion (CDG) and several other domestic banks acted as selling members of the syndicate.  BNP Paribas acted as financial advisor to IFC on the transaction.  


Mr. Fathallah Oualalou, Minister of Finance and Privatization said "I am very pleased by the successful completion, under excellent market conditions, of IFC's Moroccan dirham bond issue.  This highlights the maturity of the Moroccan financial market owing to structural reforms initiated over the past few years.  This transaction emphasizes IFC's renewed confidence in the Moroccan economy and its outlook, which paves the way for even a stronger support by IFC to the development of Morocco's private sector."   In coordination with the Ministry of Finance, it has been decided that the market in which domestic bonds are issued by foreign entities in Morocco will be know as the “Atlas” market.


This “Atlas” bond issue is part of IFC’s continued support to Morocco.  “Given IFC’s focus on the private sector, the development of the domestic market is a priority in order to give clients better access to local currency financing, especially in longer term maturities” said Nina Shapiro, IFC’s Vice President Finance and Treasurer.


During the last two years, IFC has been working closely with the Moroccan authorities to prepare for this transaction.  We are pleased that this transaction has come to fruition so smoothly, and are pleasantly surprised with the placement with over 20 institutional investors” said John Groesbeek, Senior Financial Officer.  


IFC has been providing technical assistance to the government and the private sector in Morocco, to help shape a more efficient financial sector.  A more effective capital market will also support Morocco’s efforts to develop a corporate governance culture that will enhance investor confidence.


This transaction fits IFC's strategy of developing domestic capital markets worldwide.  Recently, IFC was also the first domestic issuers in the Malaysian Islamic bond market, the Peruvian Soles bond market and the Colombian Peso bond market. By doing these transactions, IFC is helping the development of domestic markets in order to give better access to long term financing for local companies. These operations also establish IFC's credit in the local markets, thus creating the framework to follow with structured transactions.


IFC funds its lending activities by issuing bonds in the international capital markets.  The Corporation's securities, which are rated Aaa by Moody's and AAA by S&P, have been issued in 31 different currencies.  IFC's funding program for fiscal year 2005 is around $3.0 billion.  IFC has been the first, or among the first, nonresidents to issue in many currencies including Malaysian ringgits (Islamic issue), Peruvian soles, Colombian pesos, Spanish pesetas, Portuguese escudos, Greek drachmae, Hong Kong dollars and Singapore dollars in the domestic markets, and in Czech koruna, Philippine pesos, and Polish zloty in the eurobond markets.