OCP raises MAD 5 billion through hybrid bond issuance

OCP hybrid bond strengthens the Moroccan phosphate group’s financing strategy after it completed a MAD 5 billion perpetual subordinated bond issuance on the domestic capital market. The public offering was fully subscribed by Moroccan institutional investors and forms part of OCP’s broader investment program for 2023 to 2027, valued at approximately $13 billion.

The transaction was structured into four unlisted and over the counter tradable tranches, each with a nominal value of MAD 100,000. The perpetual securities have no maturity date and do not include repayment guarantees. They also provide OCP with options to redeem the bonds early and to defer coupon payments under specific conditions.

Coupon rates for the initial period ranged from 2.87% to 4.82%, depending on the tranche. The rates were calculated using Bank Al-Maghrib Treasury bond benchmarks published on June 1, 2026, combined with risk premiums linked to the duration of each tranche. The shortest maturity reference tranche carried the lowest premium and coupon, while the longest maturity reference tranche offered the highest return.

OCP stated that the operation strengthens the group’s economic equity and enhances financial flexibility as part of its long term capital management strategy.

Investor demand was heavily concentrated in the shortest maturity reference tranche. Although each tranche was initially capped at MAD 1.25 billion, the first tranche attracted MAD 3.935 billion, accounting for nearly 79% of the total issuance. The second tranche received MAD 360 million, the third MAD 460 million, and the fourth MAD 245 million.

The results reflected investors’ preference for limiting exposure to long term interest rate fluctuations while benefiting from annual coupon adjustments. This outcome contrasted with the original allocation framework, which had anticipated stronger demand for longer duration tranches.

Collective investment funds, known as OPCVM in Morocco, represented the dominant investor category. They received MAD 4.225 billion, equivalent to around 85% of the total placement. Retirement and pension funds were allocated MAD 500 million, while insurance and reinsurance companies received MAD 275 million. No allocation was made to financial holding companies, credit institutions, or the Caisse de Dépôt et de Gestion.

The perpetual subordinated securities combine characteristics of debt and equity. Because of their perpetual structure, subordinated status, and payment flexibility, rating agencies generally classify part of these instruments as quasi equity. This allows companies to reinforce their balance sheets without issuing new shares and without significantly increasing reported leverage.

Each tranche contains mechanisms that encourage eventual redemption. Coupon rates increase by 25 basis points at the first optional call date and by an additional 75 basis points approximately twenty years later. However, OCP is under no obligation to exercise these redemption options.

The transaction marks OCP’s fourth domestic hybrid bond issuance since 2016. It follows the group’s $1.5 billion international hybrid bond issued in April 2026. That international operation attracted strong investor interest, achieving an oversubscription rate of 4.6 times from 176 investors across 23 countries.

The lower coupon levels offered on the domestic issuance reflect Morocco’s interest rate environment rather than any change in the company’s credit profile. OCP said the transaction demonstrates its ability to mobilize institutional savings and diversify funding sources through capital markets.

Funds raised through the operation will support OCP’s investment program aimed at expanding plant nutrition solutions production capacity from approximately 15 million tons to 20 million tons by 2027. The strategy includes development of the Meskala mine and the Mzinda industrial complex. The group is also advancing projects intended to achieve water self sufficiency and carbon neutrality by 2040.

For the 2025 fiscal year, OCP reported revenue of MAD 113.9 billion and an EBITDA margin of approximately 38%. Net debt stood near $13 billion, corresponding to a net leverage ratio of about 2.76 times EBITDA.

The group maintains investment grade ratings from major agencies. Moody’s assigns OCP a Baa3 rating with a stable outlook, one level above Morocco’s sovereign rating. S&P rates the company BBB minus, while Fitch assigns a BB plus rating. OCP’s continued use of hybrid financing reflects its objective of securing long term capital while preserving credit quality.

CDG Capital and Attijari Finances Corp. acted as financial advisors for the transaction. CDG Capital and Attijariwafa Bank managed the placement process.