OCP: International Hybrid Bond Issuance, a First in Africa!

OCP has turned to international markets to finance its growth. After three operations on the domestic market since 2016, the Group carried out a hybrid bond issuance for an amount of $1.5 billion, a first both for the Group and for an African company.

Another distinctive feature is that OCP is a publicly owned group, whereas such transactions have historically been associated with private issuers. Moreover, they remain rare in the region (Central and Eastern Europe, the Middle East, and Africa).

In 2025, only two companies issued such instruments: Majid Al Futtaim, in dollars in November, and CPI Property, in sterling in September.

As a market reference, the hybrids of Aldar (Abu Dhabi) and Majid Al Futtaim trade with a premium of around 160–175 basis points over their senior debt of equivalent maturity.

Despite an uncertain geopolitical environment, this transaction is described as a success, as it attracted very strong demand, with oversubscription of 46 times and participation from 176 investors across 23 countries.

This confirms the strength of OCP’s credit profile and its ability to access international capital markets under competitive conditions.

The coupons on the transaction, arranged by BNP Paribas, Citi, and JP Morgan, were set at 6.74% for the tranche callable in April 2031 and 7.37% for the tranche callable in April 2036.

Capital Structure Optimization

This international hybrid issuance forms part of a strategy to optimize OCP’s capital structure.

It allows the Group to finance its growth strategy while maintaining leverage ratios at Investment Grade levels, thanks to the favorable accounting treatment of the instrument.

Indeed, the instrument is fully classified as equity under IFRS standards. For rating agencies Moody’s and S&P, it benefits from a 50% equity credit.

A Solid and Reliable Credit Profile

OCP is considered a robust and reliable credit signature on several fronts. It benefits from an integrated business model backed by world‑class reserves, generating strong and resilient cash flows across cycles.

In addition, it enjoys structurally high profitability, supported by a competitive position on the cost curve and strong operational flexibility.

From a financial standpoint, OCP maintains a clear discipline aimed at preserving its Investment Grade status, with controlled leverage, solid liquidity, and recurring access to capital markets.

This international issuance comes at a particularly favorable moment in market conditions. Investors currently have abundant liquidity, as primary market activity has been limited over the past six weeks.

Moreover, geopolitical conditions, although tense, remain favorable for issuers not directly exposed to the conflict, such as OCP.

Against this backdrop, global demand for phosphate fertilizers is currently characterized by sustained growth, estimated at around 3% per year through 2030, driven by global food security challenges, while supply has been constrained, notably in China.

The closure of the Strait of Hormuz, following the war in Iran, has caused significant disruptions to input flows, particularly sulfur, a substantial share of global exports of which transit through this route.

As a result, sulfur prices from the Middle East rose by 35% in April compared with pre‑war levels.

Secured Supply Chains

That said, the world’s leading phosphate producer has adopted a proactive approach to securing its supplies, with inventory levels sufficient to cover operational needs at least until the end of June.

Beyond this coverage, its procurement strategy relies on structured and proven geographic diversification, notably sourcing from Kazakhstan, the Red Sea region, the Gulf of Mexico, as well as Canada and Europe.

In the event of a prolonged or intensified conflict, tensions in the sulfur market could spread across the entire industry, with potential impacts on prices and availability.

OCP has therefore decided to bring forward part of its maintenance operations to the second quarter, initially scheduled for the third and fourth quarters.

This flexibility is reinforced by the Group’s ability to adjust its production mix, notably by relying on products such as TSP (Triple Superphosphate), which is structurally less sulfur‑intensive than DAP and does not use ammonia—precisely the two inputs currently under price and supply pressure.

TSP currently represents around 30% of volumes, with a target of 50% in 2026. Exports of this product have more than doubled in two years, reaching one million tonnes in India.

High EBITDA Margins

Moreover, the development of solutions such as green ammonia constitutes an additional lever of resilience.

By gradually reducing dependence on conventional ammonia sources—strongly correlated with gas prices—this approach ultimately allows for stabilization of nitrogen input costs and enhanced supply security.

Furthermore, OCP remains the world’s largest producer of phosphate fertilizers according to Moody’s, with market shares of 31% in fertilizers, production capacity of 16 million tonnes in 2025, 36% in phosphoric acid, and 19% in phosphate rock.

The Group generated $12.2 billion in revenue, up 25% compared with 2024, and EBITDA of $4.6 billion.

Historically, periods of rising input costs—such as in 2008 and 2022—have been accompanied by high EBITDA margins, driven by the pass‑through of costs into selling prices.

Current conditions follow this same pattern. However, OCP’s resilience is primarily structural. The Group has demonstrated its ability to consistently maintain margins above the sector average, both during upswings and normalization phases, reaching 38% in 2025.

A Standalone Investment‑Grade Credit Profile

OCP’s financial strategy is centered on preserving an Investment Grade credit profile, with controlled leverage and prudent liquidity management.

In a context of increased volatility, the Group has proactively revised its investment program.

It maintains Investment Grade ratings of BBB‑ from S&P and Baa3 from Moody’s, with the latter being one notch above—sending a strong signal regarding the standalone quality of the Group’s credit profile.

As a result, net leverage stands at 2.76x EBITDA, in line with Investment Grade standards, with capital expenditures of $3.7 billion and net debt of $13 billion.