US rating agency Moody’s highlighted the positive effect of Morocco’s exit from the Financial Action Task Force (FATF) grey list, noting that the decision boosts confidence in the country’s financial system.
In a note commenting on the decision, the rating agency described the announcement as “positive for local banks and the broader domestic financial system, as it will reduce the reputational risk arising from increased levels of supervision by the Financial Action Task Force, and enhance confidence in the Moroccan financial system.
For the US agency, the decision will facilitate Moroccan banks’ relationships with international correspondent banks, clearing houses, and investors by reducing the risk of delays in clearing and settling cross-border payments and receiving transactions, thereby supporting capital inflows into the country.
Moody’s notes that Moroccan banks, which operate within a sound regulatory framework and have adopted sophisticated risk management practices, will continue to maintain good efficiency ratios.
The agency notes that Morocco has consolidated its legal and regulatory framework for combating money laundering and terrorist financing, with the adoption of Law No. 12-18 on the fight against money laundering.
This law has strengthened the financial sanctions system by creating a commission in charge of their application as well as monitoring measures based on risk.
The law also broadened the list of offence, strengthened the system of financial and disciplinary sanctions and increased the penalties for those convicted of money laundering.
Moody’s mentions Morocco’s establishment of the National Financial Intelligence Authority (ANRF), whose mission includes proposing legislative, regulatory or administrative reforms to combat money laundering and terrorist financing.
Morocco’s brilliant return to the international debt market
Morocco’s return on the international debt market, carefully planned through a recent international roadshow from financial authorities, was relying on the grey list exit.
Shortly before the FAFT decision, reports of Morocco’s imminent grey list exit encouraged international investors to partake in the return.
Despite recent volatility in the market bond market after unexpected US inflation in February, the Moroccan Treasury successfully completed its international debt market raising.
Morocco raised USD 2.5 billion for its dollar bond on March 1, the maximum of the sought range.
The Moroccan exit was led by BNP Paribas, Citi, Deutsche Bank and JP Morgan, after three years of absence from the market.
The success of the campaign crowned by a very favorable closing demonstrates the confidence expressed in Morocco’s international financial viability on financial markets.
The state currently has $7.3 billion of Eurobonds outstanding, according to Dealogic data.
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