Oman hires banks for dual-tranche dollar bond

Oman is expected to issue around $2 billion with its new bonds, according to sources. (File photo: Shutterstock)

The government of Oman has hired banks ahead of a potential issue of US dollar bonds, its first this year, as the country seeks to cover its budgetary needs.

The Sultanate’s ministry of finance has mandated Citi, JPMorgan and Standard Chartered as coordinators for the potential deal, a document by one of the banks leading the deal showed.

The senior unsecured bonds will be split into a tranche slightly longer than five years and another tranche of 10 years.

The announcement comes after the small Gulf oil producer - bruised by a slump in energy prices over the past few yars -
published encouraging deficit figures late last week, giving some respite to its debt investors.

Oman’s state deficit in the first five months of this year amounted to 358.4 million Omani rials ($930.98 million), a 67% reduction on an annual basis, and the smallest fiscal shortfall for the country for similar periods since 2014.

While not at risk of a credit crunch, Oman has been downgraded by all major credit rating agencies, becoming the Gulf’s weakest debt market link among Gulf Arab oil exporters.

Oman’s international debt, however, “has been one of the best performing” in the Gulf Cooperation Council this year, said
Aarthi Chandrasekaran, portfolio manager at Shuaa Capital.

“It was penalized very harshly by investors at the end of last year when the market was pricing it as a single B credit, which was not warranted,” she added.

Oman is expected to issue around $2 billion with its new bonds, sources previously told Reuters, out of total funding requirements for the year previously estimated to be more than $6 billion.

The three coordinating banks for the transaction have also been hired as joint bookrunners along with First Abu Dhabi Bank, MUFG, Natixis, and Societe Generale, the document said.

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Last Update: Wednesday, 20 May 2020 KSA 09:55 - GMT 06:55
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