Morocco Treasury takes a cautious approach with 850 million dirhams bond sale

Saturday 03 - 09:15

The Moroccan Treasury adopted a highly selective stance at its latest domestic bond auction, accepting just 850 million dirhams from 5.28 billion dirhams worth of bids submitted by investors.

The September 23 auction resulted in a satisfaction rate of only 16%, according to BMCE Capital Global Research’s latest Flash Adjudication, based on data from Bank Al-Maghrib. The operation also stood out for the Treasury’s decision to serve only one maturity, while rejecting bids for both 13-week and two-year securities.

The limited amount raised suggests that the authorities remain attentive to borrowing costs, even as demand for government debt remains substantial.

Only the 52-week maturity receives funding

The 52-week line was the only security awarded during the auction. Investors submitted 1.56 billion dirhams in bids for the bond maturing on February 14, 2028, which carries a 2.30% coupon.

The Treasury accepted 850 million dirhams, equivalent to 54% of the amount offered on that specific line.

Investor bids ranged from 2.32% to 2.52%. The cut-off rate was set at 2.3495%, while the weighted average rate reached 2.3348%.

That average stood roughly eight basis points above the 2.255% level indicated by the primary-market yield curve for the same maturity, highlighting the difference between the rates sought by investors and the reference levels observed in the market.

Two-year bonds rejected despite strong demand

The two-year maturity attracted the largest volume of bids during the session, with investors offering 2.54 billion dirhams.

However, none of those offers was accepted. The bond, scheduled to mature on November 13, 2028 and carrying a 2.45% coupon, attracted bids ranging from 2.5768% to 2.7626%.

Those rates were significantly higher than the 2.445% reference level on the primary yield curve. Depending on the bid, the gap ranged from approximately 13 to 32 basis points.

The Treasury therefore opted not to raise funds through this maturity, despite the substantial demand.

The 13-week line also failed to secure an allocation. Investors submitted 1.18 billion dirhams in bids at rates ranging from 2.14% to 2.25%, but the Treasury did not retain any of them.

Primary yield curve remains broadly stable

The latest auction took place against a relatively stable interest-rate environment. The 52-week rate on the primary market stood at 2.255%, compared with 2.241% one week earlier, representing an increase of 1.4 basis points.

Since the beginning of the year, the same maturity has risen by 5.3 basis points.

Movements have been more pronounced at longer maturities. The five-year rate has increased by 26.4 basis points since January to 2.938%, while the 10-year rate has risen by 17.4 basis points to 2.939%.

By contrast, the two-year rate has declined by 4.8 basis points over the same period, reaching 2.445%.

The contrasting movements underline the different dynamics affecting Morocco’s government bond curve, with longer maturities experiencing more noticeable upward adjustments than shorter ones.

September borrowing reaches 8.5 billion dirhams

Despite the cautious approach at the September 23 auction, the Treasury has raised 8.465 billion dirhams through four borrowing sessions during the month.

That represents around 77% of the maximum 11 billion dirhams funding requirement announced for September. The remaining amount stands at approximately 2.535 billion dirhams.

The Treasury also faced significant debt repayments during the month. September maturities included 6.983 billion dirhams in principal repayments linked to a two-year line, in addition to 1.296 billion dirhams in coupon payments.

The amount raised during the month was therefore sufficient to cover the principal repayments, leaving an estimated surplus of around 1.5 billion dirhams relative to those maturities.

Selectivity persists across the year

The September operation also fits into a broader pattern of selective allocations by the Treasury since the beginning of 2026.

According to the same BMCE Capital Global Research report, investors have submitted approximately 235.2 billion dirhams in bids on the primary market since January. Of this amount, 75.9 billion dirhams has actually been awarded.

The overall acceptance rate therefore stands at around 32%.

The five-year maturity has recorded the highest allocation rate at 61%, followed by the 52-week maturity at 39% and the two-year maturity at 29%.

At the 10-year maturity, only 12% of submitted bids have been accepted. Several other maturities, including 13-week, 15-year, 20-year and 30-year securities, have recorded no allocations over the period.

The 13-week segment is particularly notable because investors have submitted 16.8 billion dirhams in bids since January, despite receiving no allocation.

The latest auction consequently illustrates a recurring feature of Morocco’s domestic debt market: strong investor demand does not necessarily translate into equivalent Treasury borrowing. The authorities continue to determine allocations according to the rates offered, limiting the amount raised when market pricing does not match their financing conditions.