Contacts
Washington
Issam Abousleiman +1 202-458-0865
iabousleiman@worldbank.org
Rabat
Najat Yamouri 037 63 60 50
nyamouri@worldbank.org
Washington, DC, October 22, 2007 -- The Government of Morocco and the World Bank have signed a Master Derivatives Agreement that will allow the Government of Morocco to use a range of hedging products to assist in managing the currency and interest rate risks of its sovereign debt portfolio.
“Morocco will have access to an expanded menu of risk mitigation products for its sovereign debt management. Prudent use of hedging products can strengthen government risk management and help reduce vulnerability to financial shocks.” Kenneth Lay, The World Bank Treasurer said, This is the second Master Derivatives Agreement between the World Bank and one of its member countries that allows the use of hedging products for the entire public debt portfolio, rather than just for the country’s outstanding World Bank debt. The new agreement would enable the Government of Morocco to access a range of hedging products offered by the World Bank, including currency swaps, interest rate swaps, caps and collars and, commodity swaps.
In working toward an agreement, the Moroccan government relied on support from the World Bank’s Treasury staff in considering the legal and technical aspects of the World Bank’s hedging products, within the government’s broader asset-liability management framework.
“The Moroccan Treasury has already used the World Bank financial instruments in managing the currency and interest rate risk of the government debt portfolio. The signing constitutes another milestone that would allow us extended access to the World Bank risk management products to be used in implementing our debt management strategy.” Mr. Zouhair Chorfi, Director of Treasury and External Finance of the Moroccan Ministry of Finance, said.
The hedging products offered by the World Bank allow borrowers to use standard market techniques to transform the risk characteristics of their outstanding debt portfolio within the Asset Liability Management framework of the government. In providing these banking products, the World Bank intermediates between market institutions and its borrowers, entering separate financial contracts with each of them. Borrowers benefit from financial terms that reflect the Bank’s AAA credit rating.
The World Bank uses one of the standard derivatives agreements developed by the International Swaps and Derivatives Association, Inc. (ISDA) (the ISDA Master Agreement – Multicurrency - Cross Border), as documentation for clients’ hedging transactions.
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