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(Bloomberg) — Morocco is set to shelve a planned issue of a sovereign bond this year and may draw instead on its credit line with the International Monetary Fund, according to a person with knowledge of the matter, as the government looks for a cheaper way to repay debt maturing in December.
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The kingdom is considering tapping around $1 billion from the IMF because the surging cost of dollar debt makes borrowing unattractive this year, according to the person, who is directly involved in the discussions but not authorized to speak publicly.
Morocco was previously planning its first issuance abroad since 2020 around the time its $1.5 billion bond comes due in December. The central bank and the Finance Ministry didn’t reply to emailed requests for comment.
The North African kingdom is among frontier sovereigns shut off from capital markets at a time when the US Federal Reserve has embarked on one of the most aggressive tightening cycles since the 1980s to fight inflation. Sales of dollar- and euro-denominated debt from emerging-market governments and companies fell to their lowest in more than a decade last month.
The central bank and the Finance Ministry’s treasury and external finances department will soon sign an agreement to withdraw the funds from the IMF in order to help repay the maturing dollar bond, according to the person.
Morocco needs financing from the IMF to meet the government’s fiscal needs and not because of concern over its foreign-exchange buffers, said the person.
The kingdom obtained $3 billion from the IMF under a so-called precautionary and liquidity line — credit that can be tapped if needed — in 2020 and later that year repaid a little under a third of the amount.
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