African Development Bank raises MAD 1 billion in its first dirham bond

The African Development Bank has completed its first-ever bond issue in Moroccan dirhams, raising 1 billion dirhams, the institution announced in a statement on Friday, October 30.

The bond was sold to qualified investors through a private placement, the Bank said. It carries a seven-year maturity and pays a floating interest rate indexed to MONIA, the Moroccan Overnight Index Average.

The operation fits into a broader plan to diversify the financing the Bank offers in the Kingdom. Its main lending currencies so far have been the euro and the US dollar. Adding the dirham is meant to let the Bank reach a wider range of clients and offer them solutions better suited to their needs.

The Bank also intends to set up a treasury portfolio dedicated to the dirham. This could be built up in part by converting some of its foreign-currency cash holdings, with the goal of gradually expanding its capacity to lend in local currency inside the Kingdom.

Local-currency financing, the institution says, is a strategic pillar of its work. Morocco was chosen for this pilot because of its long-standing partnership with the Bank, the size of its portfolio of operations in the country, client demand for dirham loans and the maturity of the Kingdom’s financial ecosystem.

Working alongside Moroccan authorities and financial-sector players, the Bank plans to help deepen the national financial market, notably by developing hedging instruments and improving liquidity in the derivatives market. Lessons from the operation, it said, will support a gradual move into other African currencies.

Since 1978, the African Development Bank has invested around 15 billion euros in more than 150 projects in Morocco, covering transport, energy, water, agriculture and social protection.