OCP Raises $1.5 Billion in First Global Hybrid Bond
Morocco's OCP Group raised $1.5 billion in its first global hybrid bond sale. The offering was oversubscribed nearly five times amid rising input costs.
The phosphate giant Morocco's OCP has raised $1.5 billion through its first international hybrid bond, marking the first time an African group has issued a United States dollar-denominated hybrid on global markets.
The issuance was structured into two distinct tranches: A tranche maturing in April 2031 with a 6.74% coupon. A tranche maturing in April 2036 with a 7.37% coupon.
The bonds were arranged by BNP PARIBAS, CITIGROUP INC, and JPMORGAN CHASE & CO.
The issuance successfully reopened the MENA public primary bond markets following a month-long hiatus caused by volatility linked to the conflict in Iran. Despite geopolitical uncertainty, investor demand was strong, with the order book peaking at nearly $7 billion. This 4.6 times oversubscription prompted the company to upsize the transaction, which saw participation from 176 investors across 23 countries.
Global fertilizer markets are currently tightening due to supply constraints and export restrictions from China. Disruptions to sulphur supply, a key ingredient, have pushed Middle East sulphur prices up by about 35% in April following the closure of the Strait of Hormuz.
OCP has secured enough sulphur inventory to cover its operational needs through at least the end of June. The company has diversified its sourcing options to include: * Kazakhstan * Canada * Europe, the Gulf of Mexico, and the Red Sea.
To mitigate higher input costs, OCP is increasing production of triple superphosphate (TSP), which requires less sulphur and no ammonia compared to diammonium phosphate. TSP is projected to account for more than 50% of production volumes by 2026. The company also announced it is bringing forward maintenance works to the second quarter, which will result in a temporary 30% production cut.
