Oman sells US$1.5b sukuk

DUBAI: Oman sold US$1.5 billion (RM6.26 billion) in sukuk on Wednesday but the generous investor returns it had to offer showed that the crisis over the killing of Saudi journalist Jamal Khashoggi was raising funding costs across the Gulf region, said fund managers.

The bond issue is Oman’s second public debt issuance this year, as the sultanate borrows internationally to finance a budget deficit caused by a slump in oil prices over the past few years.

It follows a US$6.5 billion conventional bond issue in January, the country’s largest-ever debt sale.

Oman’s new debt issue came amid rising investor concerns over the deterioration of Saudi Arabia’s international relations after the killing of Khashoggi, a critic of the kingdom’s Crown Prince Mohammed Salman.

The sultanate started marketing the seven-year notes earlier on Wednesday with an initial price guidance of about 300 basis points over mid-swaps.

The issue, which received orders in excess of US$3.5 billion, was launched with a final spread of 280 basis points over midswaps, around 15-20 basis points above what some fund managers considered to be the new issue’s “fair value”.

Despite the volatility, Oman was not the only borrower in the Gulf to brave the markets. Abu Dhabi’s state fund Mubadala and Bahrain’s oil company Nogaholding had announced this week plans to issue international bonds soon.