Wires

UPDATE 3-Ruler of cash-strapped Morocco plans Gulf Arab tour

Share

* King had kept his distance from Gulf

* Rabat bets on Gulf demand for $1 bln bond sale in 2012

* Euro crisis has hit Morocco hard

(Releads with bond sale, adds S&P outlook revision and analystquote)

By Sylvia Westall and Souhail Karam

KUWAIT/RABAT, Oct 11 (Reuters) - Morocco's King Mohammedwill make a rare tour of Gulf Arab countries before the end ofthe year as his cash-strapped government tries to drum upinvestor interest in a sovereign bond.

While it largely escaped last year's Arab Spring unrest,Morocco has little money to improve living standards and isunder heavy domestic pressure to provide jobs and measures tocut poverty.

"It (king's tour) will be a roadshow ... an opportunity tomarket fresh investment opportunities Morocco has to offer,"said an official Moroccan source.

Morocco's $90-billion economy is heavily exposed to the eurozone, whose troubles have hit tourism revenues, migrantremittances and foreign investment this year.

Kuwait's Foreign Ministry undersecretary Khaled al-Jarallahtold Reuters the monarch was expected to visit Kuwait this monthor in November and would discuss investment and bilateralrelations.

The monarch will also visit Saudi Arabia, the United ArabEmirates, Bahrain, Qatar and Oman, Jarallah said.

Rabat hopes Gulf institutional investors will buy heavilyinto the sale of a $1 billion-plus sovereign bond which has beendelayed to the end of November from October.

Morocco, the biggest recipient of European Union financialaid outside Europe, raised about 1 billion euros via its mostrecent bond issue in 2010.

A Saudi official who declined to be named under briefingrules told Reuters that King Mohammed planned to visit SaudiArabia after the haj, the Muslim pilgrimage to Mecca which isexpected to run from Oct. 24 to 29 this year.

A spokesman for the Moroccan king's cabinet declined tocomment.

A tour of fellow Gulf monarchies by King Mohammed would alsobe important diplomatically for Morocco, which is ruled by theArab world's longest-serving dynasty but lacks the oil riches ofthe younger Gulf monarchies.

Since his enthronement in 1999, King Mohammed has kept adistance from Gulf Arab monarchies, with far fewer officialvisits than during his late father King Hassan's reign.

Some of the Gulf's most influential rulers, including SaudiKing Abdullah, regularly visit Morocco but mostly for medical orother private reasons. Concern over the spread of Arab Springrevolts has brought Arab monarchies closer to each other.

MORE ACCESS

The king urged his government in July to tap financing fromGulf sovereign wealth funds in what was widely regarded as aninstruction to give Gulf investors more access and dilute thedomination of European and local firms.

Last year Morocco and Jordan were invited to join the GulfCooperation Council (GCC) and it promised to deliver $2.5billion in financial to each. But this has yet to bear fruit.

In August, the IMF approved a $6.2 billion precautionaryline of credit for Morocco over two years which it said thecountry would treat as "insurance" in case economic conditionsdeteriorated and it faced sudden financing needs.

On Thursday, Standard and Poor's revised down the country'soutlook to negative from stable and said Morocco might lose itsinvestment grade status if it did not significantly reduce itscurrent account and budget deficits.

"S&P's revision of Morocco's outlook to 'negative' shouldmake its reliance on subscriptions from the Gulf Arab regioneven more important than before," a Casablanca-based debtanalyst said.

King Mohammed is also expected to meet firms interested inthe planned sale by Vivendi of its majority stake inMaroc Telecom .

Morocco is drafting a new banking law that should open thedoor to Islamic lenders. Rabat may also discuss partnershipsbetween its state-run airline Royal Air Maroc and a major Gulfairline, after low-cost carriers reduced their business inMorocco due to lower European demand.

Rabat wants billions of dollars to fund ambitious solar andwind energy development plans as well as resortdevelopments.{ID:nL5E8KO9LR]

(Reporting by Sylvia Westall and Asma Alsharif in Cairo andSouhail Karam in Rabat; Editing by Robert Woodward)

((sylvia.westall@thomsonreuters.com)(+965 2240 8945)(ReutersMessaging: sylvia.westall.thomsonreuters.com@reuters.net))

Keywords: MOROCCO GULF/KUWAIT