$500m sukuk sold in private placement

The government of Oman sold a $500 million six-year sukuk in a private placement.

  
Image used for illustrative purpose only. An investor works on his computer on the trading floor of the Muscat Securities Market (MSM) in the Commercial Business District of Ruwi in Muscat

Image used for illustrative purpose only. An investor works on his computer on the trading floor of the Muscat Securities Market (MSM) in the Commercial Business District of Ruwi in Muscat

REUTERS/STR New
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


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