Moody's améliore la perspective du Maroc de négative à stable

Moody's améliore la perspective du Maroc de négative à stable 
L'agence de notation Moody's a amélioré la perpective de la notation du Maroc qui passe de négative à stable. Elle a également confirmé sa note à BA1. Cecie est dû aux réformes engagées en matière de décompensation des produits pétroliers ainsi qu'à la nouvelle stratégie industrielle dont les perspectives sont prometteuses, en particulier dans l'offshoring, l'automobile et l'aéronautique. KM



Rating Action: 
[size=14]Moody's changes outlook on Morocco's Ba1 rating to stable from negative
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Global Credit Research - 02 Sep 2014

New York, September 02, 2014 -- Moody's Investors Service has today changed to stable from negative the outlook on Morocco's Ba1 government bond rating. Concurrently, Moody's has affirmed the Ba1 rating.

The key drivers of the decision to change the outlook to stable are as follows:

1) The implementation of the government's energy subsidy reform, which improves the structure of fiscal and external accounts;

2) The government's industrial policy agenda, which promotes higher value-added export industries, particularly in the offshoring, automotive and aerospace industries, and is funded by significant foreign direct investment (FDI).

The affirmation of Morocco's Ba1 rating balances the expected peak in the country's debt/GDP in 2015 and significant ongoing borrowing requirements with its easy access to funding.

Moody's has also kept all rating ceilings unchanged, namely the foreign-currency bond ceiling at Baa2/P-2, the foreign-currency deposit ceiling at Ba2/NP, and the local-currency bond and deposit ceiling at Baa1.

RATINGS RATIONALE

RATIONALE FOR OUTLOOK CHANGE TO STABLE

- IMPLEMENTATION OF ENERGY SUBSIDY REFORM

The first driver of Moody's decision to change the outlook on Morocco's government bond rating to stable from negative is the implementation of the government's energy subsidy reform. This reform is facilitating structural adjustments to the fiscal and external accounts and helping to reduce the large twin deficits that the government accumulated in the aftermath of the Arab Spring. The formation of these deficits was the key driver for the negative outlook assignment in February 2013.

Cumulative budget execution data from January to June 2014 confirm Morocco's progress in reducing subsidy expenditures, in line with Moody's expectations. Subsidy and transfer expenditures over the first half of 2014 were almost 47% lower than over the same period in 2013. The government is on track (1) to reach the MAD35 billion end-year subsidy expenditure target; and (2) to reduce the subsidy bill to 3.8% of GDP in 2014 and below 3% in 2015, from 4.8% in 2013 and 6.6% in 2012. The latter assumes that oil prices remain broadly constant. Moreover, the retrenchment in subsidy expenditures has allowed the government to expand public investment expenditures significantly in H1 2014 compared to the same period last year.

Moody's also notes the impending pension reform and the expected adoption of the Organic Budget Law as being supportive of creditworthiness.

- INDUSTRIAL GROWTH STRATEGY BEARING FRUIT

The second driver of today's outlook change is the government's industrial growth strategy, which has started to show significant results in the areas of offshore outsourcing and the creation of export-oriented industrial zones with a focus on higher value-added automotive, aerospace and electronics industries. Automobile construction and electronics-related exports have increased at high double-digit rates over H1 2014 compared to the same period last year, with the potential for further expansion. The development of these industries was funded by significant FDI inflows, which have also strengthened Morocco's international reserve base.

Morocco's "Vision 2020" strategy for the development of the tourism industry as the country's main source of foreign currency income is also supportive of creditworthiness.

RATIONALE FOR Ba1 RATING AFFIRMATION

Moody's has affirmed Morocco's government bond rating at Ba1 to reflect the following key considerations:

1) Morocco's general government debt-to-GDP is projected to peak at about 66% of GDP in 2015, and to decline only gradually thereafter, thus leaving the fiscal strength indicators in line with Morocco's rating peers.

2) The country's gross borrowing requirements remain significant at about 15% of GDP per year, in line with peers, although its low share of foreign-currency funding and ample access to domestic and external funding at favourable conditions are mitigating factors.

3) The availability of IMF support under the Precautionary and Liquidity Line (PCL), which provides additional insurance against deteriorating funding conditions in case of tighter external liquidity conditions or a significant change in market sentiment.

WHAT WOULD CHANGE THE RATING UP/DOWN

Upward rating pressure would result from higher economic growth through improved competitiveness. In addition, further institutional improvements such as negotiated under the Deep and Comprehensive Free Trade Area (DCFTA) with the EU would be supportive of creditworthiness.

Risks to Morocco's current rating stem from a potential reversal in the country's fiscal consolidation strategy due to the materialization of domestic or geopolitical risk, as well as a significant worsening of the current account following a protracted slowdown in the euro area, which is Morocco's main trading partner.

GDP per capita (PPP basis, US$): 5,456 (2013 Actual) (also known as Per Capita Income)
Real GDP growth (% change): 4.4% (2013 Actual) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 0.4% (2013 Actual)
Gen. Gov. Financial Balance/GDP: -5.5% (2013 Actual) (also known as Fiscal Balance)
Current Account Balance/GDP: -7.6% (2013 Actual) (also known as External Balance)
External debt/GDP: 38.4 (2013 Actual)
Level of economic development: Low level of economic resilience
Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.

On 28 August 2014, a rating committee was called to discuss the rating of the Morocco, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have increased. The issuer's fiscal or financial strength has increased.

The principal methodology used in this rating was Sovereign Bond Ratings published in September 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this rating action, if applicable.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

This rated entity or its agent(s) did not participate in the rating process. Moody's was not provided, for purposes of the rating, access to the books, records and other relevant internal documents of the rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Elisa Parisi-Capone


https://www.moodys.com/research/Moodys-changes-outlook-on-Moroccos-Ba1-rating-to-stable-from--PR_307468