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Fitch lowers OCP rating to BB+/negative outlook

The financial rating agency has just lowered the OCP rating from BBB-/stable outlook to BB+/negative outlook. This change of opinion reflects the deterioration of Morocco’s prospects from stable to negative under the effect of the crisis caused by the Covid-19 pandemic. In addition, the rating agency justifies the downgrade by sectoral conditions. Price behavior should remain unfavorable in the short term, analysts predict. Fitch projects a reduction of more than 10% of its assumptions for the price of a ton of fertilizer by 2022. That said, the strategic nature of the fertilizer sector has pushed several governments (Australia, Argentina, China, Belgium, France, Ivory Coast, Argentina…) to take measures to guarantee the proper functioning of the supply chain. These countries account for around 60% of global fertilizer consumption. According to our information, the demand addressed to the OCP remains at a normal level and the various units of the group operate at full capacity to satisfy the order books which fill up at a regular rate.

The imbalance between supply and demand on the world market should be resolved in the medium term, favoring a rebound in prices, experts anticipate. The colossal investments made by OCP in new capacities and the reduction of costs combined with the resumption of international prices would support an increase in the group’s commercial and financial performances in the future.

Prior to the OCP, Fitch downgraded several companies in the same industry and others face the same treatment in the coming months. In the chemical sector in particular, rating agencies have degraded many players since the start of the Covid-19 crisis. S&P downgraded 20 issuers (30 issuers saw their downgraded outlook in negative outlook), Fitch 18 issuers and Moody’s 34. For OCP, Fitch nevertheless recalls that the BB+ rating “reflects a solid business profile supported by the vertical integration of the group, its competitiveness in terms of costs, the size of the reserves held as well as its leading position on the phosphate market”. Remember that the mining group is always rated in the Investment Grade category by S&P.

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