Gulf News

Oman tightens price on $2b sukuk

Move follows a rush of orders for more than three times issue size

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Oman’s $2 billion (Dh7.3 billion) Islamic bond sale on Tuesday lured orders for more than three times the issue size, allowing it to cut the price offered to investors as it seeks funds to help trim a budget deficit.

The sultanate set final terms on its seven-year sukuk at 235 basis points over the midswap rate, from initial guidance of about 270 basis points, according to a person familiar with the deal.

Money managers bid over $6.9 billion for the new issue at the final spread, the person said, asking not to be identified because the informatio­n is private.

Budget gap

Oman is the largest Arab oil producer outside Organisati­on of Petroleum Exporting Countries (Opec) and a halving of crude prices since 2014 left it with a budget gap of almost 22 per cent of economic output in 2016, according to the Internatio­nal Monetary Fund (IMF).

S&P Global Ratings cut the country’s credit score to subinvestm­ent grade status on May 12 citing volatile export revenue and heightened financial needs.

“There was a good demand and now a rush to get an allocation with accepting even less yield,” said Lutz Roehmeyer, who manages about $2.5 billion at Landesbank Berlin Investment and bid to buy the new issue even after the country tightened pricing.

Alizz Islamic Bank, Citigroup Inc, Dubai Islamic Bank, Gulf Internatio­nal Bank, HSBC Holdings Plc, JPMorgan Chase & Co and Standard Chartered Plc are managing the deal.

The country’s last foray into internatio­nal debt markets was a $5 billion three-part offering of dollar bonds in March. external

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