Subtle Influences in the Bond Market: Morocco’s Treasury Bets on Patience Amid Rising Interest Rates
The bond market in Morocco continues to send mixed signals, reflecting a delicate phase of financial balances, as signs of a relative improvement in bank liquidity intersect with ongoing pressure on interest rates, particularly in the long term. In light of this landscape, the General Treasury adopts a cautious stance, reflecting its desire to control financing costs without succumbing to market conditions.
According to the latest memo from BMCE Capital Global Research, the liquidity deficit in banks saw a slight reduction during the period from March 19 to March 26, settling at a negative 149 billion dirhams, marking an improvement of 1.14 percent. This improvement coincided with an increase in Bank Al-Maghrib’s interventions through 7-day advances to 63 billion dirhams, a move that underscores continued monetary support to maintain market stability.
Despite this relative easing, the situation has not significantly reflected in the money market, with interbank interest rates remaining stable around 2.25 percent, while the MONIA index stood at 2.238 percent. Analysts suggest that the improvement in liquidity remains limited, as the market continues to depend on central bank interventions.
However, the most notable event this week was the Treasury’s abstention from any borrowing during the last auction session, despite an offer exceeding 3.5 billion dirhams for short- and medium-term maturities. This step, coming after a limited mobilization the previous week, reflects a clear trend toward selectiveness, as the state prefers to postpone borrowing rather than accept high-interest levels.
This stance gives the Treasury room to maneuver but simultaneously contributes to increased tension within the secondary market. Interest rates have recorded notable increases, especially in the long term, with yields on 15-year bonds rising by more than 8 basis points and 10-year bonds by about 7.8 basis points, while short maturities were not spared from this upward trend.
By the end of the period, yields settled at 2.30 percent for 13 weeks, 2.48 percent for one year, 3.31 percent for ten years, 3.54 percent for fifteen years, reaching 4.12 percent for 30-year bonds. These figures reflect a market demanding higher returns in exchange for risk, amidst anticipation for liquidity’s future and the Treasury’s funding strategy.
As April approaches, challenges appear more pronounced, especially with maturities nearing 8 billion dirhams. Nevertheless, corporate tax revenues could provide an additional boost to the Treasury, allowing it to maintain its cautious approach.
In this context, the bond market remains suspended on a delicate equation: either maintaining strict financing management or returning to the market under new conditions dictated by necessity.
