06 August 2011
MUSCAT: BankMuscat, the Sultanate's biggest bank, has raised $300 million syndicated-clubbed loan from overseas institutions to meet its long-term requirements for dollar dominated project finance.
"The syndicated loan is for a three-year period, which gives us stability (in managing assets and liabilities). That is the biggest advantage of this syndicated loan," K. Gopakumar, general manager (Wholesale Banking) at BankMuscat, told Times of Oman.
Although the bank had an option to raise dollar funds by way of a euro medium term notes programme, the Omani institution opted for a syndicated loan route to avoid any uncertainty due to the recent volatility in the market. "We took a much safer route."
Overseas markets
Internationally, financial institutions are finding it difficult to raise funds due to a series of negative factors haunting the financial system, especially the recent United States debt crisis.
BankMuscat took the money from six leading international institutions, which have an outstanding relationship with the Omani bank, added Gopakumar. The dollar dominated fund is for meeting its project finance needs. "We fund a lot of projects, which is an ongoing process," added Gopakumar.
It may be noted that the bank's shareholders gave a blanket approval in last February for raising $800 million through a euro medium term note (EMTN) programme.
The whole plan was to launch a series of bond issues over a ten-year period with varying maturities, currencies and terms through public subscription or private placement.
As far as Oman's project funding requirement is concerned, two major projects -- an aluminium rolling mill and a major power project -- have reached implementation stage. The $385 million-Aluminium Rolling Mill Company, a joint venture between Takamul Investment and Italy's FATA EPC, and the $1.5 billion-Sur power plant will need sizable funds for meeting their capital expenditure.
An agreement was signed between Oman Power and Water Procurement Company and a multinational consortium led by Marubeni Corporation recently to set up the Sur Independent Power project.
Project finance
The Sur IPP, the largest IPP to be undertaken in the Sultanate, will provide 2,000 megawatts of capacity after full commissioning in 2014. However, no other project has reached the stage of implementation in the country.
There are ample rial funds available in the market, which resulted in interest rates to come down. However, long-term funds are not available in the market. Omani institutions need long-term dollar funds to meet dollar-dominated project finance.
BankMuscat's gross loans and advances moved up remarkably by 11 per cent to RO4.46 billion by end-June 2011, from RO4.06 billion for the same period last year. Market analysts expect the over all demand for credit in the country to grow by 8 per cent this year.
MUSCAT: BankMuscat, the Sultanate's biggest bank, has raised $300 million syndicated-clubbed loan from overseas institutions to meet its long-term requirements for dollar dominated project finance.
"The syndicated loan is for a three-year period, which gives us stability (in managing assets and liabilities). That is the biggest advantage of this syndicated loan," K. Gopakumar, general manager (Wholesale Banking) at BankMuscat, told Times of Oman.
Although the bank had an option to raise dollar funds by way of a euro medium term notes programme, the Omani institution opted for a syndicated loan route to avoid any uncertainty due to the recent volatility in the market. "We took a much safer route."
Overseas markets
Internationally, financial institutions are finding it difficult to raise funds due to a series of negative factors haunting the financial system, especially the recent United States debt crisis.
BankMuscat took the money from six leading international institutions, which have an outstanding relationship with the Omani bank, added Gopakumar. The dollar dominated fund is for meeting its project finance needs. "We fund a lot of projects, which is an ongoing process," added Gopakumar.
It may be noted that the bank's shareholders gave a blanket approval in last February for raising $800 million through a euro medium term note (EMTN) programme.
The whole plan was to launch a series of bond issues over a ten-year period with varying maturities, currencies and terms through public subscription or private placement.
As far as Oman's project funding requirement is concerned, two major projects -- an aluminium rolling mill and a major power project -- have reached implementation stage. The $385 million-Aluminium Rolling Mill Company, a joint venture between Takamul Investment and Italy's FATA EPC, and the $1.5 billion-Sur power plant will need sizable funds for meeting their capital expenditure.
An agreement was signed between Oman Power and Water Procurement Company and a multinational consortium led by Marubeni Corporation recently to set up the Sur Independent Power project.
Project finance
The Sur IPP, the largest IPP to be undertaken in the Sultanate, will provide 2,000 megawatts of capacity after full commissioning in 2014. However, no other project has reached the stage of implementation in the country.
There are ample rial funds available in the market, which resulted in interest rates to come down. However, long-term funds are not available in the market. Omani institutions need long-term dollar funds to meet dollar-dominated project finance.
BankMuscat's gross loans and advances moved up remarkably by 11 per cent to RO4.46 billion by end-June 2011, from RO4.06 billion for the same period last year. Market analysts expect the over all demand for credit in the country to grow by 8 per cent this year.
© Times of Oman 2011
