The Moroccan Bond Market Enters Phase of Measured Consolidation

The latest analysis from BMCE Capital Global Research highlights a gradual calm in Moroccan bond market. Between the stabilization of the TMP, falling bond yields, and measured interventions by Bank Al-Maghrib, the market appears to be entering a consolidation phase.

Reading the latest “Fixed Income Weekly” from BMCE Capital Global Research (BKGR), one conviction is clear. The bond market is entering a phase of measured consolidation, supported by liquidity control and a continued easing of yields, both primary and secondary. While the recovery appears to be taking hold, it primarily reflects prudent management by Bank Al-Maghrib (BAM) and a strategic repositioning by the Treasury.

A managed easing of the Moroccan bond market

The past week confirmed the continued easing of the banking liquidity deficit. It fell by 4.97%, to an average of 135.8 billion dirhams (MMDH), according to BKGR. At the same time, 7-day advances granted by the Central Bank fell by 6.1 billion dirhams, to reach 43.02 billion.

A level consistent with the stability of the interbank TMP rate at 2.25% and a slight increase in MONIA, the risk-free overnight benchmark index, which stands at 2.206%.

This analysis confirms BAM’s regulatory role, as it adjusts its interventions to maintain financing rates close to the key rate. For the coming period, BKGR also forecasts an increase in the Central Bank’s intervention volume, which would bring 7-day advances to MAD 46.5 billion.

Tensions ease on the primary market

The calm observed on the money market is now reflected in the Treasury’s auction segment. During the last session, the latter raised only 2.1 billion, or 24% of the amount offered. This assumed sub-target reflects an opportunistic financing strategy, aimed at capitalizing on favorable interest rate conditions while controlling the cost of debt.

The rate cuts are telling, with -18 basis points (bps) on the 26-week maturity, -15.3 bps on the 5-year maturity and -30.9 bps on the 15-year maturity. The lines served reflect a refocusing on longer maturities, as confirmed by the 15-year auction at 3.1547%.

BKGR sees this as a trend towards longer debt duration, enabled by the anchoring of inflation expectations and macroeconomic stability.

Secondary markets follow suit. The easing is taking full effect on the secondary market. The yield curve continues to decline, with a marked drop in short-term maturities, namely -21.73 bps on the 26-week line and -11.58 bps over one year. 5-year bonds are down -5.39 bps, while the long-term curve also shows a slight decline, except for the 30-year line, which is virtually unchanged (+0.07 bps).

The overall decline extends from short to long maturities, in a context where expectations of a reduction in the key rate remain contained.

BKGR interprets this dynamic as the logical consequence of the joint action of the Central Bank and the Treasury, which, by multiplying calibrated interventions, contribute to defusing latent tensions and cleaning up the rate structure.

Stabilization on the Moroccan bond market

Regarding forecasts, BKGR expects a relatively stable bond market in the coming weeks. While larger Treasury fundraising efforts are expected, these should take place in a controlled environment, with a moderating effect from the increase in Treasury investments in the money market.

The analysis suggests a form of implicit consensus: the time has come to optimize financing conditions, pending a more pronounced shift in monetary policy. Implicitly, this also confirms the adequacy of market expectations with the signals emitted by BAM.

Private Debt Still Timid

In this context, private debt remains discreet. Two certificate of deposit issues by CFG Bank are worth noting: one for one year with a nominal rate of 2.55%, the other for three months at 2.25%. BKGR reports no new bond issues or financing company bills, which reflects continued cautious activity in this segment.

The market remains focused on the most liquid, low-risk instruments. BMCE Capital Global Research paints a picture of a fixed income market in an active stabilization phase.

Far from being a frenzy, what is emerging is a picture of methodical consolidation, one of prudent macrofinancial management, where easing interest rates is combined with renewed fiscal discipline. This is a trajectory worth monitoring, as major central banks, from Frankfurt to Washington, are also preparing their next move.

__

(Featured image by energepic.com via Pexels)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

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.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us