Oman - burdened by high levels of debt - is more vulnerable to oil price swings than most of its wealthier Gulf neighbours.
Just after the recent oil price plunge, triggered by a price war between Saudi Arabia and Russia aimed at gaining market share, Oman was downgraded by both Moody's and Fitch, which placed it further down into 'junk' territory.
The government had explored different financing options including bank loans with maturities of five, seven or even 10 years, but those talks have been suspended, said a source close to the Omani ministry of finance.
"Everything has been put on hold after oil prices collapsed," the source said.
Oman, which did not respond to a request for comment, is not pursuing a deal at this stage, the source added.
Gulf exporters' bond spreads have spiked over the past few weeks due to weaker oil prices and global concerns over the coronavirus pandemic.
Oman and Saudi Arabia have implemented a 5% cut on their 2020 budget.
Oman's bonds due in 2047 were yielding around 6.5% before the OPEC deal collapsed on March 6, and are now yielding around 11%, Refinitiv data showed.
WHATEVER THEY CAN GET
Oman had said in January it expected a deficit of 2.5 billion Omani rials ($6.50 billion), or 8% of GDP, this year and planned to cover some 80% of that amount through foreign and domestic borrowing.
"Of course they want the money! They needed the money when oil was at $50," said a fund manager. "It might get really serious with them, if they don't manage to secure the loan," the manager, who did not wish to be named, said.
Brent crude LCOc1 was trading at $27.5 a barrel on Tuesday at 1415 GMT.
Oman's rapid pace of debt accumulation over the past few years has raised concerns over its sustainability in view of the slow pace of fiscal and economic reform.
"Whatever money they can get they should take. Especially if oil stays here for long, and I think it will," the fund manager said.
Oman's new ruler, Sultan Haitham bin Tariq al-Said, who assumed power in January, said the government would work to reduce public debt and restructure public institutions and companies to bolster the economy. ($1 = 0.3847 Omani rials)
(Reporting by Davide Barbuscia, Editing by William Maclean) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: email@example.com))