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TEXT-Fitch affirms Casablanca and Marrakesh

Fitch Ratings has affirmed the Urban Community of Casablanca and the
Urban Commune of Marrakesh's (Marrakesh) Long-term ratings at 'BB+'. A full list
of rating actions is at the end of this comment.

The ratings affirmation reflects a favourable institutional framework, including
thorough measures implemented by the state to monitor the local public sector's
finances, and a high probability of state support if needed. The ratings also
reflect the cities' sound debt/current balance ratios, as well as the cities'
importance to Morocco's economy. They also capture the lack of both cities'
involvement in the control of their tax base and rigidity on expenditure, and
limited margin of manoeuvre to improve budgetary performance.

While the strong monitoring by the central government of the cities' budgetary
and debt operations is a positive rating factor, conversely, depending so much
on the state also has some flaws. Particularly, regarding debt, the state,
through its fully owned FEC (Fond d'Equipement Communal,) the public financial
institution has the monopoly on almost all loans to Moroccan local and regional
governments. Applications for new borrowings are quite bureaucratic, and it is
sometimes difficult for local authorities to know accurately and on a timely
basis their amount of outstanding debt.

The Stable Outlook reflects the sizable and sustained co-funding from the
central government due to Marrakesh's investment programme, which reduces the
recourse to external borrowing. And while there is no foreseen reason, a rating
downgrade could be prompted by a change in the institutional framework that
would prompt a weakening of central government oversight. Furthermore, a
continued increase in the debt servicing burden on the operating balance could
also result in a negative rating action.

According to estimates done by the central government, the urban commune of
Marrakesh has around 800,000 inhabitants, and is the third-largest city in the
Kingdom of Morocco ('BBB-'/Stable). Marrakech was the political capital of
Morocco. It is now a key service centre in the Southern Part of Morocco. It is
made up of five boroughs, which play an important role in delivering public
services. The Urban Commune of Casablanca has a population estimated at 3.9
million, although due to intertwined flows with surroundings cities, it is
challenging to know with a great deal of accuracy its current population. The
largest national companies tend to be based in Casablanca.

Cities in Morocco are responsible for a wide range of tasks including water and
electricity distribution, public lighting, urbanisation, and treatment of solid
and liquid waste. Cities are mainly funded through transfers from central

The rating actions are as follows:

Urban Community of Casablanca
Long-term foreign currency ratings: 'BB+'; Stable
Long-term local currency ratings: 'BB+'; Stable
National Ratings: 'A+(mar)'

Urban Community of Marrakesh
Long-term foreign currency ratings: 'BB+'; Stable
Long-term local currency ratings: 'BB+'; Stable
National Ratings: 'A+(mar)'Additional information is available on

The ratings above were unsolicited and have been provided by Fitch as a service
to investors.

Applicable criteria "Tax-Supported Rating Criteria", dated 15 August 2011, and
Local and Regional Governments Rating Criteria outside United States", dated 5
March 2012, are available at
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