Oman's plan to introduce Islamic money market instruments will support the growth of the Islamic sector and diversify lenders' assets, according to Moody's.

Last week, the Central Bank of Oman (CBO) announced progress of the planned introduction of Shariah-compliant money market instruments.

The move is "credit positive" for Oman's Islamic banking sector, the ratings agency said in its new analysis.

The instruments, which are part of a medium-term Islamic banking strategy, include Shariah-compliant emergency liquidity support and wakala-based remunerative deposit facility.

"These instruments will support Islamic banks' and windows' liquidity needs and will position Islamic entities on the same competitive platform of conventional peers," Moody's said.

"The instruments that CBO plans to introduce are part of a medium-term Islamic banking strategy.

Since 2012, Oman's Islamic assets have expanded to comprise 16 percent of total banking assets as of May this year. Islamic banking assets posted a 3% year-to-date growth as of May. The growth was supported by economic growth and higher oil prices.

(Writing by Cleofe Maceda; editing by Seban Scaria)