Morocco is drafting its own sukuk law in order to keep up with its neighbors after global sukuk offerings reached a global record. Although Moroccan officials have not said when the law is expected to go into effect, both Egypt and Tunisia are drafting laws to enable Islamic bond issues by 2013.
The deputy director of treasury at the Moroccan Finance Ministry, Elhassan Eddez, told Bloomberg in a telephone interview that issuing sukuk would allow the issuers to “reach conventional debt and sukuk investors at the same time.” He added that, “The sukuk market has a wider investor base.”
The bond environment in Morocco is generally weak. The country is still preparing its first-ever dollar-denominated bond, and the yield on 4.5% euro-denominated bonds due October 2020 fell 127 basis points last week to reach 4.61%, as compared to a 139 basis point drop in the GCC. Standard & Poor’s gave the country a BBB rating, the company’s lowest investment grade rating, though it should be noted that both Tunisia and Egypt have junk ratings.
Nonetheless, the demand for sovereign sukuk issues is climbing internationally. Sukuk sales have risen 66% so far this year to reach $43.4 billion, the highest amount ever. Yields on sukuk also fell last week by 116 basis points on average to reach 2.74%, the lowest since 2009.
Several countries offered sukuk for the first time this year, including Turkey, Qatar, and Oman, while Egypt and Tunisia have laws regulating sukuk on the way.