Bank of Africa Launches MAD 1 Billion Perpetual Bond to Boost Capital and Drive Growth

Bank of Africa is launching a new perpetual bond offering worth one billion dirhams, designed to strengthen its capital base. This transaction represents a strategic lever for the bank to leverage its “Cap 2027” roadmap, while strengthening its financial resilience in the face of Basel III requirements and uncertainties in the macroeconomic environment.

Bank of Africa (BOA) is undertaking a new capital strengthening operation with the launch of a 1 billion dirham perpetual subordinated bond. This operation represents a major strategic repositioning for the bank, chaired by Othman Benjelloun, focusing on financing growth, consolidating regulatory capital, and anticipating future prudential requirements.

A structuring instrument launched by the Bank of Africa

The issue, open for subscription from June 20th to 24th, 2025, is aimed exclusively at qualified investors. It is divided into two unlisted tranches, one at a rate revisable every five years (Tranche A), the other at a rate revisable annually (Tranche B).

Both have perpetual maturity, with the possibility of early repayment from the fifth year, under strict conditions and with prior approval from Bank Al-Maghrib. However, the very nature of these bonds distinguishes them from traditional debt instruments.

Equipped with subordination, loss absorption, and coupon suspension clauses, they are designed to strengthen the company’s Additional Tier 1 (AT1) capital, i.e., the most robust from a prudential perspective. In short, BOA is improving its balance sheet structure and giving itself greater flexibility to deal with potential shocks.

A financial lever serving the strategic vision “Cap 2027” defined by the bank of Africa

The main objective of this issue is to support the deployment of the strategic trajectory “Cap 2027” defined by Bank of Africa.

This ambitious roadmap aims to consolidate the group’s fundamentals while accelerating its development on a national and pan-African scale. The issuance of AT1 perpetual subordinated bonds allows the bank to sustainably strengthen its Tier 1 capital level, an essential condition for supporting the growth of its financing, investment, and digital innovation activities, while complying with Basel III requirements.

This capital increase also aims to preserve the group’s financial flexibility in an uncertain international environment, marked by geopolitical tensions, rapid technological changes, and increased expectations from regulators. BOA thus intends to secure the levers of its expansion while strengthening the confidence of institutional investors and international partners in its ability to execute its vision by 2027.

A signal to the market

For the financial market, this issue is not insignificant. It extends a series of similar operations initiated by BOA since 2017, reflecting a methodical strategy of strengthening the regulatory safety cushion.

By doing so, the bank demonstrates both its desire to anticipate the requirements of Basel III and its ability, recognized by institutional investors, to structure sophisticated financial instruments that meet international standards.

The increase in AT1 transactions within the Bank of Africa group, six issues since 2017 for a cumulative amount of MAD 4.5 billion, reflects a conscious strategic choice to prioritize hybrid capital capable of absorbing losses while securing future growth. BOA anticipates the demands of a banking environment where balance sheet resilience is a marker of confidence and attractiveness.

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First published in LES ECO.ma. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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