Oman may announce US dollar sukuk sale

Country has borrowed in the international markets in past few years to finance state spending

The government of Oman was yesterday expected to announce a plan to issue new US dollar-denominated sukuk, or Islamic bonds, sources familiar with the matter said, speaking on condition of anonymity.

One of the financially weakest states in the Gulf, Oman has borrowed extensively in the international markets over the past few years to finance state spending and development projects at a time of lower prices.

Its latest foray in the foreign debt markets was a $6.5 billion (Dh23.87 billion) conventional bond, the country’s largest ever, sold in January this year.

With that bond, Oman covered the vast majority of a three oil billion riyal (Dh28.61 billion; $7.79 billion) deficit projected in its 2018 state budget.

But sources told Reuters earlier this year that the government was also holding discussions with banks over a sukuk sale.

The new Islamic bond issue could be announced as early as yesterday, said the sources. The ministry of finance did not immediately respond to an email and telephone calls seeking comment.

Oman’s sukuk would be the country’s second public Islamic bond issue in international markets. It sold its first last year, raising $2 billion with a seven-year maturity.

The ratio of Oman’s external government debt to gross foreign exchange reserves jumped to 70 per cent in 2017 from 36 per cent in 2016 and 6 per cent in 2015, according to a central bank report published last month.

A rebound in oil prices shrank the country’s budget deficit in the first half of 2018.