Morocco eyes €1 billion euro bond sale amid falling yields

Morocco is preparing to tap international debt markets with a new euro-denominated bond issuance, its first since 2023, to help finance an ambitious infrastructure development program ahead of co-hosting the 2030 FIFA World Cup.

Finance Minister Nadia Fettah Alaoui emphasized the country's current preference for euros over dollars during a conference in AlUla, Saudi Arabia. While Morocco stands ready to proceed with the bond sale, officials are waiting for January's market volatility to settle before moving forward.

The timing appears favorable, as yields on Morocco's existing euro notes maturing in March 2026 have declined significantly, dropping about one percentage point since early 2025 to reach 3.03%. This would mark Morocco's first euro-denominated bond since 2020, when it raised €1 billion through two €500 million tranches. The country's most recent international debt offering was a $2.5 billion dollar-denominated issuance in 2023.

The planned bond sale represents part of a comprehensive financing strategy, with Morocco's parliament authorizing up to $6 billion in new foreign debt for 2025. The euro bond is expected to account for approximately one-third of this ceiling, with bilateral and institutional partners providing the balance.

These funds will support critical infrastructure projects, including railway expansion, airline fleet modernization, construction of two deep-sea ports, and development of twelve desalination plants. The country is also investing heavily in green hydrogen and renewable energy initiatives. Additionally, Morocco needs to secure at least $2 billion for pension reforms planned this year.

Mark Bohlund, senior credit research analyst at Redd Intelligence, suggests Morocco might time the bond issuance to follow the renewal of its flexible credit line with the International Monetary Fund, noting this would help secure more favorable yields and protect against external shocks.

The financing push comes as Morocco faces substantial investment needs, with total spending through 2035 projected to reach at least $35 billion, according to Bloomberg calculations based on government data. This figure includes costs related to recovery from the 2023 earthquake and preparations for the 2030 World Cup, which Morocco will co-host with Spain and Portugal.

The European Union, Morocco's primary trading partner, is expected to contribute significantly to financing these infrastructure initiatives, particularly those connected to the World Cup preparations.