Outlook 2021: Robust EM primary predicted; returns may wane amid weakened credit picture

By Rebecca Melvin

New York, Dec. 31 – The outlook for emerging markets debt issuance in 2021 is positive given forecasts for a weak U.S. dollar, steady interest rates and the potential for further economic recovery following 2020’s epic global recession caused by the Covid-19 coronavirus pandemic.

EM strategists anticipate higher bond issuance, and some look to generally sound economic recovery as vaccines and herd immunity promise to diminish the pandemic’s impact.

Recovery is likely to be patchy, however, with the potential for renewed lockdowns and other problems tied to the pandemic remaining a threat in 2021, they say.

BofA Securities’ Global Research predicts a 23% surge in EM corporate issuance for a total of $555 billion in the upcoming year, according to its report, 2021: Moving from intensive care to rehab.

The bank sees a rise in corporate issuance and flat sovereign issuance, which got a boost in 2020 when uncertainty prompted sovereigns to seek prefunding of budgetary needs, while corporate players pulled back from the capital markets.

Emerging market debt issuance in hard currencies, which includes dollar and euro-denominated debt and corporate and sovereign issuance, was $784.15 billion in 1,254 deals in 2020 as of Dec. 18, compared to $620.86 billion in 1,107 deals for the same period of 2019 and $431.26 billion in 762 deals in that period for 2018, according to Prospect News’ data.

Meanwhile, EM bond returns in 2021 are expected to be somewhat soft, even though the solid bounce from 2020’s early lows has held. BofA expects 2.6% total returns in EM debt for 2021, the majority of that being in high-yield rather than investment-grade debt, where spreads are already tight.

“The backdrop for emerging market debt is bullish,” according to BofA’s Moving report, published on Nov. 22. It flagged three factors likely to impact corporate performance, which are U.S. Treasury rates, global fiscal and monetary stimulus, and the potential for new Covid-19 related shutdowns.

Credit is trading within a narrow spread range in all but a few industrial sectors and weaker countries. “We do see increased political risk in many markets given weaker economies, Covid fatigue and popular unrest. We see additional downside risks based on political volatility, lower commodity prices and trade uncertainties. Fundamentals will improve in most industries and the focus will be to keep leverage low. New issuance will rise in Asia and EEMEA [the eastern European, Middle East and Africa region], but remain stable in Latin America,” the Moving report said.

The airlines and tourism industries were particularly hard hit by the pandemic and Latin America saw a trio of airlines declare bankruptcy. The notes of those three companies were among the worst performing in EM in 2020.

Lasting impact

ING EM sovereign debt strategists, in an economic and financial analysis of EM rates and credit, said 2020’s economic downturn will likely have long-lasting effects that could impact the next 10 years or more.

Referencing the International Monetary Fund’s 2021 outlook published in October, the strategists wrote, “It’s a sit up and pay attention moment when emerging markets run a collective fiscal deficit of some 10% of GDP. Eye-watering stuff that pushes the aggregate emerging markets debt/GDP ratio above 60%,” according to the ING report, EM Credit: Risky Business, published on Dec. 19.

“That is a level that emerging market debt should not be above, but such is the effect of the 2020 crises that in fact an average of 70% GDP is probable in the medium term. Therein lies the biggest risk for emerging markets, one that will be ever present in the coming decade,” the report stated.

Nevertheless, ING remains “constructive” in the immediate few quarters as the space is likely to align with the broader markets in a positive way. In particular, the weak dollar should cushion EM economies, and a modest lift in core rates – which should be higher but not by much, the bank said – will create a “goldilocks combination.”

It recommends investors carefully select high-yield debt, where value can be found in both the local- and hard-currency space.

“The low yielding emerging markets offer very little apart from a vanilla low yielding rolldown play that remains vulnerable to any outsized upside to core U.S. dollar rates,” the ING report said.

Junk versus high grade

BofA said investment-grade issues may be hurt by U.S. Treasury rates, which are expected to remain low albeit at higher levels than currently, leaving limited room for IG tightening. High yield on the other hand, is expected to show a 7% return, the U.S.-based bank said.

BofA expects IG spreads to tighten by 10 basis points to 160 bps, and high-yield spreads to tighten 83 bps to 536 bps.

High-yield defaults should drop to 3.1% after reaching 4.8% in 2020, and GDP is expected to help corporates, but Covid-19 related challenges must be addressed, the BofA research team wrote. “Fundamentals will improve, but unevenly.”

The bank predicts total return for Asia at 3.1%, for EMEA at 2.7% and for Latin America at 2.6%.

2021’s early issuers

Issuers from the Central & Eastern Europe, Middle East and Africa region are expected to tap the market early in the new year. Egypt, Saudi Arabia, Turkey and Ghana are likely to get the ball rolling, according to BofA. Russia is also a candidate to tap the market early on as the sovereign may face new pressure or sanctions from U.S. president-elect Joe Biden’s new administration.

Turkey last issued in the international market on Nov. 25, with $2.25 billion of 5.95% 10-year notes. The notes priced at 99.612 to yield 6%, or a yield spread of 511.7 bps over Treasuries. Goldman Sachs International, HSBC Bank plc and Morgan Stanley & Co. International plc were bookrunners for the Rule 144A and Regulation S issue, which matures on Jan. 15, 2031.

However, some sovereigns will not seek to raise capital in 2021 after having prefunded their needs in 2020.

Russia was also in the market opportunistically for €2 billion of seven- and 12-year notes. The deal represented the sovereign’s first time in the international capital markets in a year.

Hungary announced in December that it will not look to raise capital in the international market in 2021. The sovereign priced €2.5 billion in a two-part offering in November, including a €1.25 billion tranche of ½% notes due 2030 and a €750 million tranche of 1½% notes due 2050.

The 2030 bonds priced at 98.638 to yield 85 bps over mid-swaps, and the 2050 bonds priced at 96.358, yielding 160 bps over mid-swaps. The notes were sold via BNP Paribas, Citigroup, Erste Group and Goldman Sachs International and were more than five times oversubscribed.

EM credit conditions eyed

Moody’s Investors Service said in a recent report that EM credit conditions will remain fragile and vulnerable to setbacks in 2021 despite a tentative recovery from the pandemic.

EM credit fundamentals are unlikely to stabilize fully in the coming year, Rahul Ghosh, a Moody’s’ senior vice president and author of the report, said. But a weaker dollar, only mild rises in core rates and robust inflows present solid underpinnings.

“Higher quality EM issuers, particularly in Asia, will navigate 2021 fairly well, supported by strong economic or industry positions and healthy access to capital. But sovereigns and companies with weaker credit profiles that have concentrated revenue streams or significant external funding requirements will endure another year of liquidity stress and potentially deteriorating creditworthiness,” Ghosh wrote.

It will probably take several years for companies across retail, transportation and automotive-related sectors to recapture pre-crisis sales and profitability levels amid sluggish demand. Furthermore, the impact of deteriorating asset quality on EM banking systems and structured transactions will begin to weigh especially as credit forbearance and fiscal support for households and small businesses starts to taper, Ghosh noted.

For EM sovereigns, stabilizing budget deficits and debt levels will be the focus. But financial conditions are expected to remain broadly supportive for most major EM issuers thanks to ultraloose monetary policy globally, ING said.

Valuations

As 2021 gets underway, government debt is expected to rise to 125% of GDP in advanced economies compared with 62% in emerging economies. (By way of comparison, Lebanon, which halted debt payments in March and sought IMF assistance, had debt to GDP of about 176% in 2019).

Equities moved higher, bond yields lifted and the dollar weakened in a powerful way in November and December. The moves were motivated by the promise of Covid-19 vaccines among other things, including the Joe Biden victory in the U.S. presidential election.

The moves mean 2021 starts out with “very tight valuations across countries and sectors,” BofA Securities pointed out. So high yield, whether in local and hard currency, is where value can be gleaned and where risk must be taken in 2021, according to ING.

Meanwhile speculation regarding potential defaults spread last year to include Turkey, Oman, Romania and South Africa after Lebanon and Ecuador joined Argentina in the default camp. But most do not foresee a sovereign default this year.

U.S. Treasury yields are expected to remain low for most of 2021, although some increases are forecast by midyear, according to BofA’s global rates team. Two-year yields are predicted to end 2021 at 0.3%, compared 0.159% currently. Five-year yields are seen ending 2021 at 0.5%, versus 0.378% currently, and 10-year yields are expected to end 2021 at 1.5%, versus 0.84% currently. Thirty-year Treasuries will end 2021 at 2.4%. They are currently at 1.55%.

The early response to an upcoming Biden Administration was positive with EM credit spread tightening of 25 bps to 50 bps. It was expected that international policies will be less contentious than in the past, increasing stability. But the proof will be in the actual policies implemented, sources say.

Presidential elections in 2021 will take place in the following EM countries: Chile in November, Ecuador in February, Peru in April and also in Israel. Mexico will have important mid-term elections.

Several countries could become fallen angels, with Mexico, Colombia, India, Russia, Uruguay, Kazakhstan and Indonesia being monitored for potential downgrades.

Commodity prices

Slightly higher oil prices are anticipated in 2021, with the price for Brent Crude oil already up at $52 per barrel and the price for West Texas Intermediate at more than $48 per barrel. Base metals are expected to increase year over year. Iron ore should see some price decreases after sharp increases in 2020. Copper prices are forecast to increase nearly 25% and gold prices up by a similar amount. Pulp prices are expected to increase about 10.5% on weaker global demand. However, with weaker global demand and political turbulence, a shock in the commodities market cannot be ruled out.

In its base case for 2021 of 2.6% overall return, which includes 1% for EM investment grade and 7.3% for EM high yield, BofA assumes a mild trajectory for Treasury yields. It also sees EM investment grade tightening by 11 bps from a current level of about 160 bps and LatAm investment grade tightening by 17 bps to 190 bps, although largely dependent on Mexico performance; Asia investment grade will tighten 16 bps to 145 bps and Asia high yield will tighten by 131 bps to 650 bps. EMEA investment-grade spreads are expected to remain almost flat at 172 bps and 58 bps tighter in high yield.

“Risks to our spread targets are wider U.S. Treasury yields, escalation of trade tensions between the U.S. and China, weaker economic growth than expected and renewed economic shut-downs on a resurgence of Covid-19, BofA said.

“Our baseline for EM HY spreads is more optimistic and calls on further spread tightening in Chinese, Brazilian, Turkish and South African corporates. We see overall EM HY spreads at 536 bps by year-end 2021. This compares to 475 bps expected for U.S. HY. We expect LatAm HY spreads to tighten 73 bps to 500 bps and EEMEA HY to tighten 58 bps to 455 bps. Asia HY should be 131 bps tighter,” the bank said. The risks to its baseline forecast for EM HY are based on political volatility, policy changes, lower commodity prices and trade uncertainties.

Issuance trends

The highest level of issuance in 2020 occurred in September when $144.54 billion in 147 deals priced in EM worldwide. That was fully 18% of the year’s total overall, according to Prospect News’ data. The second highest month was January, which was prior to pandemic lockdowns and a month that can have strong volume depending on market conditions as market players are ready to put money to work after year-end.

April was the third highest debt issuance month, with $81.3 billion in 75 new deals. That followed the year’s driest month, which was March, when $28 billion in 58 deals, or 3.6% of the year’s total, priced.

In corporate issuance, there was $450 billion in hard-currency deals overall priced through Nov. 9, which was a 3% drop from the same period last year. Full-year volume was expected to be about flat year over year. Of that, Asia accounted for 65% of issuance, EEMEA accounted for 20% and Latin America accounted for 15%.

Looking ahead to 2021, a higher supply from high-yield and investment-grade corporates and financials is expected to buoy volume.

BofA expects 2021’s higher issuance to be heavily driven by Asia, which is expected to see issuance climb 23% on the year, accounting for about 70% of the total volume. A lot of Asian issuance comes from Chinese property. Meanwhile, EEMEA’s issuance is estimated to increase by more than 10%. Saudi Arabia is expected to account for much of the higher supply, rising 11.3% to $15 billion, with Turkey, rising 64% to $5 billion. There are also $199 billion of maturities expected to come out of the region in 2021. Latin America issuance is seen remaining steady, with no issuance from Argentina.

Of the $390 billion of new U.S. dollar and euro-denominated issuance from Asia, about $103 billion is expected to come from investment-grade corporates, about $169 billion is expected to come from high-yield corporates and about $103 billion is expected to come from financials.

Of the $97 billion predicted to be issued in dollars and euros in EEMEA, financials are seen accounting for $23 billion and corporates are seen accounting for $74 billion. Saudi Arabia and Turkey are expected to increase issuance the most. Risks to these forecasts are heightened geopolitical risks and/or sanctions in the Middle East, Russia or Turkey.

Of the $69 billion of new U.S. dollar and euro-denominated debt expected to be issued from Latin America, about $15 billion is expected to be issued by financials, while corporates will account for $54 billion.

Furthermore, the rate of defaults in EM is expected to be low. There are only 20 issuer defaults predicted for 2021, with 10 anticipated out of Asia, seven out of Latin America and three from EEMEA. Most of these will come from Chinese industrials plus Argentine corporates, BofA reported.

2020 returns

Total returns were about 5.1% as of the end of November despite stiff headwinds posed by Covid-19. Performance was solid until its arrival. A large sell-off took place on Feb. 20, which led total returns for the EM region to drop to negative numbers. But EM corporates began to rebound with stimulus and other decisions made to protect operations and financials, and with the lifting of lockdowns.

As of Nov. 19, EM corporates returned 5.1% year to date and 6.3% on a LTM basis. On a regional basis, LatAm returned 3.9%, EEMEA returned 5.0% and Asia returned 5.8%.

By rating, EM investment grade outperformed EM high yield at 4.9% year to date versus 4.7%, mostly driven by a strong Asia investment-grade return of 6.2%.

The top performer was Israel with a 9.8% return year to date. Peru was next with an 8% return, followed by Indonesia, with a 6.9% return, and South Korea at 6.8%.

Almost all EM countries posted positive returns as of Nov. 19 except for Argentina, which was tracking a minus 5.9% return.

Within EM, Latin America was the region in which returns were hurt the most, but they were still able to recover to pre Covid-19 levels along with EEMEA and Asia.

Outperformers in the investment-grade space were Malaysia, Chile and Peru with return of 11.6%, 10.7% and 9.6%, respectively. Almost every country recorded a positive return in IG except for Mexico, which had a minus 2% return, and South Africa, which had a minus 7% return.

Rio Energy SA/Ugen SA/Uensa SA and IIFL Finance Ltd. were two top performing corporate issuers in the EMCB index for the year to date, with 28.2% and 26.5% outperformance, respectively.

The single largest sector was financials with 41% of all issuance across the board, followed by energy, basic materials and utilities.

Underperformers

The worst performing issuers were the UAE’s NMC Health Sukuk Ltd. in the Middle East, amid ballooning debt and a bankruptcy filing, and three Latin American air carriers, which all filed for Chapter 11 bankruptcy protection from creditors this year.

Avianca Holdings SA, the second largest airline in Latin America, filed Chapter 11 bankruptcy on May 11 and liquidated its subsidiary Avianca Peru; Chile’s Latam Airlines Group, filed for Chapter 11 bankruptcy on May 26 and announced on June 17 that it would cease operations of its subsidiary Latam Argentina; and Aerovias de Mexico SA de CV filed Chapter 11 in June after its passenger traffic fell by more than 90% in April and May.

Both hard and local currency EM bond funds experienced redemptions in excess of $6 billion, while at the country level, Romania and Thailand bond funds posted new outflow records. “The latter, dedicated to one of the most tourist-dependent economies in Asia, saw an eye-popping $3.9 billion flow out,” according to an EPFR update in March.

The weakest performing countries in 2020 were Argentina, Mexico, South Africa, UAE and Ukraine. The weakest industrial sectors were Energy & Transportation. The broader EM corporate market will be very dependent on the following macro and political themes.

Debt woes

Lebanon approved a package of reforms and requested assistance from the International Monetary Fund as it attempts to reassert some control over an economy that was in a self-described free fall. Foreign holders should expect to face significant losses on their holdings of eurobonds, while the country itself struggles with acute poverty and crushing debt of some $90 billion and was hobbled by a mega port blast that took place in August. The tragedy has been blamed on negligence on the part of government officials.

The plan involves restructuring Lebanon’s public debt and recapitalizing the country’s banks and institutions. It also includes de-pegging the Lebanese pound from the dollar, reforming the state-run electricity sector and recovering stolen assets.

Formal talks with bondholders followed on the government’s decision in March to withhold all payments on its $1.2 billion 6 3/8% bonds due March 9, 2020.

In Argentina, the sovereign debt restructuring plan for $65 billion of Argentina debt was completed in August. Low foreign exchange reserves led the Central Bank to force corporates into exchange offers with international creditors. To date, there have been seven exchanges and more are expected in 2021. Corporate prices could recover if macro stability returns by mid-2021.

Ecuador commenced two consent solicitations to amend the indentures of 10 series of notes to provide short-term relief from financial obligations while the government takes steps needed to address its unsustainable debt burden.

It won the support of enough bondholders to restructure $17.4 billion in international debt, almost a third of its total foreign obligations in August. President Lenin Moreno’s government will exchange 10 existing notes maturing between 2022 and 2030 for three new bonds due in 2030, 2035 and 2040. Under the new terms, interest payments will resume at the beginning of next year, while the earliest principal comes due in January 2026.

2020 issuance

The pandemic turned fixed-income investors away from emerging markets debt initially when it prompted lockdowns in the spring, but the asset class began making a comeback around midsummer and is expected to continue to rebound in 2021, according to sources.

Qatar’s notes

Qatar priced $10 billion of notes in three tranches due 2025, 2030 and 2050, and the Emirate of Abu Dhabi priced $7 billion of notes in three tranches during the week between the western church’s Easter holiday on April 12 and the eastern church’s Easter the following week.

The Qatar order books totaled more than $44 billion, indicating strong demand despite economic woes caused by pandemic-related shutdowns. Its $2 billion tranche of 3.4% five-year notes priced at 99.69 to yield 3.47%, or a spread of U.S. Treasuries plus 300 bps.

Qatar’s $3 billion tranche of 3¾% 10-year notes priced at 99.81 to yield 3.77%, or a spread of Treasuries plus 305 bps. Its $5 billion tranche of 4.4% 30-year notes priced at par to yield 4.4%, or a spread of Treasuries of plus 307.9 bps.

Abu Dhabi, Gazprom price

Abu Dhabi priced $2 billion of 2½% five-year bonds at 99.205, $2 billion of 3 1/8% 10-year bonds at 99.6 and $3 billion of 3 7/8% 30-year bonds at 96.136.

In April, Russia’s PJSC Gazprom priced €1 billion of 2.95% five-year loan participation notes through subsidiary Gaz Finance plc. The series 2 notes were issued under its €30 billion medium-term note program and will be listed on the Irish Stock Exchange.

The proceeds will be used by the natural gas producer to finance a loan to Gazprom earmarked for general corporate purposes.

By early May fears were still rampant that some form of EM debt crisis would break out due to the economic travails resulting from Covid-19. But it seemed that there was just enough relief to keep things afloat. Oil prices improved with the Organization of the Petroleum Exporting Countries and its allies agreeing to cut production, thereby granting some relief to the many EM countries that depend on oil revenue for their state coffers.

Egypt, Bahrain and others

Egypt, Bahrain, and Romania priced large deals in May as did China’s New World Development Co., representing corporates, and Kuwait-based petrochemical company Equate Petrochemical Co. KSCC, which priced $1.6 billion in five- and 10-year notes. New World also priced $700 million of notes in December.

But South Africa’s Sappi Papier Holding GmbH, the Johannesburg-based coated paper manufacturer, reconsidered its plans to issue a new deal and decided against a proposed offering of €250 million of five-year senior notes due to unsatisfactory market conditions.

On May 29, Tencent Holdings Ltd., a China-based investment holding company, priced $6 billion of notes in four tranches.

The pace of new issuance remained strong into year-end. An occasional mixed currency deal came to market. Industrial Bank Co., Ltd.’s Hong Kong Branch, a lender based in Fuzhou, in the Fujian Province, sold a two-tranche multicurrency offering (Baa2) of notes in a deal including $450 million of 1 1/8% notes due 2023 at 99.806 and HK$3 billion of 1.1% notes due 2022 at par. The Regulation S notes were priced on Oct. 30.

Aramco’s $8 billion

Saudi Arabian Oil Co. (Aramco) priced $8 billion of notes in five tranches (A1//A) on Nov. 18. A $500 million tranche of three-year notes priced at 99.783 to yield 110 bps over Treasuries; a $1 billion tranche of five-year notes priced at 99.967 to yield 125 bps over Treasuries; a $2 billion tranche of 10-year notes priced at 99.405 to yield U.S. Treasuries plus 145 bps; a $2.25 billion tranche of 30-year notes priced at 99.052 to yield 3.3%; and a $2.25 billion tranche of 50-year notes priced at 98.834 to yield 3.55%.

Sources noted that sovereign issuers stocked up on notes at a record level this past year due to the Covid-19 pandemic and uncertainties related to how it could impact economic activity given the associated lockdowns, social distancing and illnesses that the pandemic brought.

Other significant deals were two separate offering from the People’s Republic of China. The sovereign priced $6 billion of sovereign notes in the Hong Kong Special Administrative Region on Oct. 14 and €4 billion of senior notes due in five, 10 and 15 years on Nov. 18.

The November deal included a €750 million tranche of 0% five-year notes priced at 100.763 to yield negative 0.152%, or a spread of mid-swaps plus 30 bps; a €2 billion tranche of ¼% 10-year bonds, which priced at 99.332 to yield 0.318%, or a spread of mid-swaps plus 55 bps; and a €1.25 billion of 5/8% 15-year notes priced at 99.445 to yield 0.664%, or a spread of mid-swaps over 70 bps.

Prior to that, the People’s Republic of China sold $1.25 billion of three-year notes with a 0.425% yield; $2.25 billion five-year bonds with a 0.604% yield; $2 billion of 10-year notes with a 1.226% yield; and $500 million of 30-year notes with a 2.31% yield.

The Ministry of Finance restarted issuance of dollar bonds in 2017 and that issue marked the fourth time China has tapped the market since 2017.

The offer was 4.7x oversubscribed, and all tranches priced 5 bps to 10 bps tighter than talk.

Mexico taps market

Mexico priced $6.6 billion of notes (Baa1/BBB/BBB-) in two tranches on Nov. 16. That deal included $3,396,081,000 of 2.659% notes due May 24, 2031 priced at par to yield a spread of 175 bps over U.S. Treasuries; and $3,208,201,000 of 3.771% notes due May 24, 2061, which priced at par for a yield spread of 210 bps over U.S. Treasuries.

The new notes were offered concurrently with a tender offer for $26,013,604,000 of old notes, of which $2,671,591,000 were accepted for purchase.

Mexico also priced $6 billion of notes in three tranches in April. That deal for the North American sovereign included $1 billion of 3.9% notes due 2025, $2.5 billion of 4¾% notes due 2032 and $2.5 billion of 5% notes due 2051.

The 2025 notes priced at 98.993 for a reoffer spread of 375.9 bps over U.S. Treasuries. The 2032 notes priced at 97.764 for a reoffer spread of 437.8 bps over Treasuries; and the 2051 notes priced at 92.6 for a reoffer spread of 427.2 bps over Treasuries.

Peru raises $4 billion

The Republic of Peru priced $4 billion of global bonds in three tranches on Nov. 23, including $1 billion of 1.862% bonds due 2032 priced at par, $2 billion of 2.78% bonds due 2060 priced at 98.855 to yield 2.828% and $1 billion of 3.23% bonds due 2121 priced at 98.586 to yield 3.278%. Peru also priced two tranches of global bonds totaling $3 billion in April. A $1 billion tranche of 2.392% bonds due 2026 sold at 100.002 to yield 2.392%, and a $2 billion tranche of 2.783% bonds due 2031 sold at 100.002 to yield 2.783%.

The government of the Sultanate of Oman sold $2 billion of notes in two tranches, Also in November, the Republic of Serbia priced $1.2 billion 2 1/8% 10-year senior notes at 98.005 to yield 2.35%, or a spread of 150 bps over U.S. Treasuries, and Romania issued €1 billion 1 3/8% bonds due Dec. 2, 2029 and €1.5 billion 2 5/8% bonds due Dec. 2, 2040.

Even Morocco re-entered the market after a seven-year hiatus. The North African country priced $3 billion notes due Dec. 15, 2027, 2032 and 2050 including a $750 million 2 3/8% seven-year notes priced at 99.763 to yield 2.412%, or a yield spread of mid-swaps plus 175 bps; a $1 billion tranche of 3% 12-year notes priced at 98.57 to yield 3.043%, or a yield spread of mid-swaps plus 200 bps; and a $1.25 billion 30-year notes priced at par for a 4% yield, or a spread of mid-swaps plus 261.3 bps.

According to the official data, Morocco's economy was expected to contract by 6.3% in 2020 amid the Covid-19 pandemic.

This was the second bond that Morocco issued during the Covid-19 crisis. In late September, the country issued €1 billion of notes in two €500 million tranches.

Also in December, Prosus NV, the Amsterdam-based international internet assets division of Cape Town, South Africa-based Naspers Ltd., sold $1.5 billion of 3.832% senior notes due 2051 at a spread of 215 bps, and Oman sold $500 more in notes.

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