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Oman issues international sukuk of $1.75bn worth

Oman Sukuk

The Sultanate of Oman announced the issuance of international sukuk worth $1.75 billion with a maturity period of nine years.

This is the second time the Oman resorts to obtaining financing from international markets this year.

The Ministry of Finance in the Sultanate stated in a statement that the issuance comes within the financing operations included in a government plan approved at the beginning of this year.

International instruments

Oman had issued $3.25 billion in sukuk in January 2021, amid the pressures of the emerging Coronavirus pandemic.

“The Sultanate’s financial needs are based on the principle of financial discipline and maintaining the level of public debt,” the statement said.

The statement indicated that the sukuk witnessed a high demand by international investors and asset management and investment institutions.

The interest rate for the offering was 4.875%, which is lower than the price offered by the Omani government.

The bids varied geographically between the Gulf, Asian, European and American markets, according to the statement.

Oman is damaged

Oman, with a population of 4.6 million people, more than 40% of whom are foreigners, has been hit hard by the drop in crude oil prices since 2014. The country also has been dealt a new blow due to COVID-19.

The country, which is seeking to boost the tourism sector to diversify its economy, saw its gross domestic product shrink by 6.4% in 2020. The government debt rose to 81% of GDP, compared to 60% in 2019, according to the International Monetary Fund.

A previous report by Fitch Ratings said that the next three years will be a critical test of the financing resilience that Oman has shown in the past.

Fitch expected a large fiscal deficit for the Sultanate’s budget with the maturity of external debts, between $12 billion and $14 billion annually in the period 2020-2022.

Informed sources had revealed that the Sultanate of Oman had held talks with a number of banks to participate in a possible dollar-denominated sukuk offering during the current year 2021.

The sources said that the discussions of the Sultanate of Oman are still in the initial stages.

A document also stated that the Sultanate has appointed banks for its second issuance of international bonds this year, which is a planned issuance of nine-year US dollar-denominated sukuk.

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