What's Happening?
S&P Global Ratings has upgraded Morocco's long-term foreign-currency rating to BBB- from BB+, restoring its investment-grade status. This upgrade makes Morocco the only African sovereign Eurobond issuer with such a ranking. The decision comes after Morocco lost its investment-grade status in 2021 due to the pandemic and drought impacting its tourism and agriculture sectors. S&P cited Morocco's strong policy mix and structural reforms as key factors in the upgrade. The agency also noted that Morocco's economic performance and outlook are supported by these reforms, which are expected to drive growth and reduce unemployment in its $154 billion economy.
Why It's Important?
The upgrade to investment-grade status is significant for Morocco as it is expected to attract foreign direct investment, which is crucial for economic growth and job creation. The improved rating could lead to a decline in Morocco's debt-to-GDP ratio as increased revenue helps narrow the fiscal deficit. This development positions Morocco favorably in the international financial markets, potentially leading to more favorable borrowing terms. Despite Moody's and Fitch rating Morocco one notch below investment grade, the country successfully issued a €2 billion bond in March, indicating strong investor confidence.
What's Next?
With the investment-grade status, Morocco is likely to see increased interest from international investors, which could lead to more capital inflows and economic development. The government may continue to implement structural reforms to maintain and improve its economic standing. Additionally, the stable outlook from S&P suggests that Morocco's economic policies are on a solid path, which could lead to further upgrades if the positive trends continue.
