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    Morocco mulls global sukuk after debut local issue

    10 Oct 2018

    Morocco is weighing an international sukuk after kicking off a long-awaited maiden domestic sale on Friday that may act as a benchmark for more local issuance.
    The 1bn-dirham ($106mn) Ijara domestic issue will be sold by the finance and economy ministry’s treasury and external financing department via the FT Imperium Sukuk CI special purpose vehicle, El Hassan Eddez, who heads the ministry’s debt management, told reporters in Rabat on Friday.
    The sale “sets a benchmark for future dirham-denominated issues by Moroccan Islamic and conventional banks, public firms and even regions to fund infrastructure projects or renewable energies,” he said. It also “allows the option of an international sovereign sukuk should we decide to tap the international bond market,” he said.
    An initial pricing target of 2.72%, or 3 basis points above the yield for five-year treasury bills, was fixed as a ceiling for the sale, which will have a maximum five-year maturity. The state expects to cash in the receipts of the sale on October 15, Eddez said. The paper can be traded on the secondary market.
    Eddez declined to discuss potential future international debt sales. There are no plans to issue more domestic sukuk this year, he said.
    Global sukuk sales reached a record $55.7bn in 2017, eclipsing the previous record of $51.6bn raised in 2012, according to data compiled by Bloomberg. Islamic bonds use a variety of structures to link returns to assets in order to comply with the ban on interest. The securities were pioneered in Malaysia in the 1980s.
    Eddez’s department issues at least 100bn dirhams in domestic treasury bills each year. It plans to review is financing strategy between a mix of conventional bill and sukuks, he said.
    “We have the ambition to create a domestic sovereign sukuk market that is as liquid as the T-bills market,” he said.

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