'It was a fantastic deal and heavily oversubscribed,' says one of the lead arrangers. 'The Moroccans were keen to put people on the book who really wanted the kingdom's risk in their portfolio and we were very careful to ensure we found real money and real accounts.'

The Eur 100 ($115) notes had a launch price of Eur 98.97 ($114.21), paying a 5 per cent annual coupon and a launch spread of 215 basis points (bp) over European mid-swaps. The paper was worth Eur 99.06 ($114.31) on 3 July and had traded down to 212 bp.

The Moroccan offering has a total of 100 accounts on the book, of which 64 per cent were European investors, 25 per cent from the Middle East, 9 per cent from the US and 2 per cent from Asia.

The proceeds from the issue will be used to retire old and expensive debt to multilateral institutions which carries a coupon of 8 per cent. 'It is clear that Morocco does not need the money,' says the lead arranger. 'It has just completed the very successful privatisation of [tobacco monopoly] Regie de Tabacsfor $1,500 million, and the current account has been in surplus for the past three years.'

The success of the bond is seen as a sign that international investors have not been deterred by the suicide bombings that rocked the kingdom's business capital Casablanca in May. A further indication of international confidence came on 1 July, when Prime Minister Driss Jettou and a group of European investors signed a series of conventions, worth $62 million, for developments in the kingdom's tourism sector.