African Development Bank Launches First Moroccan Dirham Bond Issuance

The African Development Bank (AfDB) has successfully completed its first-ever bond issuance denominated in Moroccan dirhams, raising a total of 1 billion dirhams. This strategic move aims to strengthen the Bank’s capacity to finance projects in local currency and reduce its reliance on foreign currencies for operations within Morocco.

Structure and Terms of the Issuance

The bond was issued through a private placement to qualified investors. Key terms of the instrument include:

Maturity: 7 years
Interest Rate: Variable, indexed to the Moroccan Overnight Index Average (MONIA), the benchmark rate for the Moroccan money market.

For the AfDB, this operation represents more than just a new source of funding. It allows the institution to integrate the dirham into its core financing currencies, alongside the euro and the US dollar. This diversification enables the Bank to offer financial solutions that are better tailored to the specific needs of its clients. Financing in local currency can significantly limit borrowers’ exposure to exchange rate fluctuations, particularly when their revenues are generated in the same currency as their debt.

Strategic Objectives and Portfolio Development

The institution plans to establish a dedicated cash portfolio denominated in dirhams. This portfolio will be funded, among other sources, by converting a portion of its existing foreign currency liquidities. The goal is to progressively build up local currency resources to support new financing initiatives in Morocco.

The choice of Morocco as the pilot country for this initiative is based on several key factors:

A long-standing historical partnership with the AfDB.
A substantial portfolio of ongoing projects in the country.
Strong client demand for dirham-denominated financing.
A sufficiently developed financial market capable of accommodating such instruments.

Broader Impact on the Moroccan Financial Market

Beyond this initial issuance, the Bank intends to contribute to the broader development of the Moroccan financial market. Key areas of focus include:

Promoting financial risk hedging instruments.
Enhancing liquidity in the derivatives market.

These tools are essential for enabling businesses and financial institutions to better manage risks associated with interest rates and financing operations. The Moroccan experience is expected to serve as a reference model for gradually extending this local currency financing approach to other African currencies.

For businesses across the continent, the development of local currency financing represents a concrete opportunity: accessing resources that align with their operational activities without systematically bearing the risks associated with foreign currency debt.

Stakeholders and Historical Context

The operation was carried out with the support of Moroccan authorities, including:

The Ministry of Economy and Finance
Bank Al-Maghrib (the central bank)
The Moroccan Capital Market Authority (AMMC)

Financial Advisors and Placements:

Advisory Bank: Attijari Finances Corp
Placement Agents: Attijariwafa Bank and CDG Capital

The AfDB has been present in Morocco for several decades. Since 1978, it has mobilized nearly €15 billion to finance over 150 projects across key sectors, including transport, energy, water, agriculture, and social protection. This new dirham-denominated bond issuance opens an additional pathway for diversifying the financial resources mobilized within the country.