Oman to issue 500m riyals of bonds, sukuk in 2015

Government currently issues little debt beyond domestic issues of development bonds

Oman is expected to issue 500 million riyals ( Dh4.76 billion, $ 1.3 billion) worth of conventional and Islamic sovereign debt early next year, and aims to choose the arranging banks in October, said the head of the country’s first fullfledged Islamic bank.

Last month, the finance ministry received applications from banks to arrange the issuance, with plans to raise 300 million riyals via conventional bonds and 200 million riyals with sukuk, said Jamil Al Jaroudi, chief executive of Bank Nizwa.

“We expect it to be in the market in the first quarter of 2015,” Jaroudi told Reuters on the sidelines of the Global Islamic Finance Forum.

The issuance would be in local currency and would apparently be separate from an international, US dollar- denominated sovereign bond issue which Oman has said it may conduct.

The government currently issues little debt beyond domestic issues of development bonds worth around 100 million riyals. But government spending has been rising sharply in the last few years, increasing pressure on the government to develop its presence in the debt markets.

The sovereign sukuk would be the government’s first issue of Islamic bonds, and would be welcomed by the sultanate’s nascent Islamic finance industry, which currently has access to only a small number of Sharia- compliant investment products. Oman began to introduce Islamic finance in 2012, becoming the last of the six GCC states to do so, and its Islamic capitalmarket is undeveloped. The central bank has said it will wait for a sovereign sukuk issue before developing its own set of sharia- compliant moneymarket tools.