oman plans to borrow 2b from overseas markets
Last Updated : GMT 06:49:16
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Last Updated : GMT 06:49:16
Arab Today, arab today

Oman plans to borrow $2b from overseas markets

Arab Today, arab today

Arab Today, arab today Oman plans to borrow $2b from overseas markets

Omani Rials
Muscat - Arab Today

Oman aims to conduct a large US dollar bond sale this week that could exceed $2 billion, and also plans to issue dollar sukuk over the next few months to plug a budget deficit caused by low oil prices, investors said.

The government intends to sell a conventional bond with maturities of five, 10 and 30 years, according to lead banks, probably after roadshows end in the United States on Tuesday. 

Oman has also mandated banks for a dollar sukuk, which could come soon after the conventional issue, said the investors, who obtained their information from roadshows conducted by Omani officials in the United Arab Emirates on Sunday.

Telephone calls and an email to Oman's finance ministry seeking comment were not answered.

Given Oman's substantial funding needs - the government said in January it planned to borrow OMR2.1 billion internationally this year - the conventional bond could be sized at $2.5 billion or even larger, the investors said.

Oman may want to move quickly with a big issue.

Long-term loan

The 30-year tranche would be a first for Oman and could attract demand from non-Gulf investors who showed strong appetite for high-yielding, long-term Middle Eastern assets when they bought 30-year notes offered by Saudi Arabia last October and Egypt in January.

"By issuing a 30-year tranche, they are clearly looking to tap international accounts with natural appetite for longer duration exposure," said Doug Bitcon, head of fixed income funds and portfolios at Dubai’s Rasmala Investment Bank.

The new five-year bond is likely to be priced at around 200 basis points over mid-swaps, factoring in a new issue premium of about 25 bps to Oman's 2021 bond, which traded around 175 bps over mid-swaps on Monday. The 10-year tranche could go up to 300-310 bps over mid-swaps, investors said.

Oman issued bonds due in 2021 and 2026 last June, then tapped them in September.

The 30-year tranche could be priced between 370 and 390 bps over mid-swaps, offering a yield between 6.5 per cent and 7 per cent, investors said.

A 390 bps spread would be very attractive against Indonesia's 30-year bond issued in December and trading around 228 bps, or even Turkey's 2045 bond, currently seen at about 364 bps, one portfolio manager said.

One potential scenario could see Oman making big issues of 10- and 30-year notes while limiting the size of the five-year tranche. It could then count on unsatisfied demand for short-dated Omani paper when it issues its sukuk, which are likely to have maturities of five and seven years, said the manager.

Source : Times Of Oman

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