02 July 2016
Muscat - In yet another move to fill the fiscal deficit gap due to low oil prices, the government of Oman sold a $500 million six-year sukuk in a private placement. Although more details about the placement are not available, the profit rate of the Ijara-structured sukuk is set at 3.5 per cent. The amount will have to be repaid in three equal instalments after four, five and six years. Ijara is a common sharia-compliant sale and lease-back contract. Standard Chartered was appointed as the lead manager for the deal. Oman's first Ijara format five-year sukuk worth RO 200 million ($520 million) issued in October last year and listed on the Muscat Securities Market received strong orders. The government which is facing a widening fiscal deficit has been adopting several measures tide over the falling revenue from lower oil prices.
Recently, the government raised a $2.5 billion two-part bond and a $1 billion loan from banks. This was the first international bond issue in two decades by the Sultanate. The government also sold $1 billion in bonds to mature in five years at an interest rate of 3.625 per cent and a ten-year issue worth $1.5 billion at 4.75 per cent. The Petroleum Development Oman (PDO) last week signed an agreement with a group of international financial institutions to raise raised $4 billion. The country's budget deficit more than tripled in the first three months of 2016 to RO 1.64 billion from RO 544.6 million from a year before. Although total expenditure decreased by just 1.9 per cent to RO 2.39 billion, revenues also fell by nearly RO 1 billion, or 40.6 per cent, to RO 1.45 billion in the first quarter.
© Oman Daily Observer 2016