Oman agrees $2.2bln loan with large group of banks - sources

Oman was working with a group of banks to raise a $1.1bln loan, which could have gone up to $2bln depending on market appetite, sources said

  
Omani Riyal. Image for illustrative purposes.

Omani Riyal. Image for illustrative purposes.

Getty Images

DUBAI - Oman has raised $2.2 billion with a loan, more than double the amount it had initially sought, in a deal which attracted interest from a large group of regional and international lenders, four sources said.

The Gulf state, rated sub-investment grade by all major credit rating agencies, had been in talks for a loan of at least $1 billion, sources told Reuters in November. In January, sources said it was looking to raise a $1.1 billion loan which could go up to $2 billion depending on market appetite. 

The four sources said on Wednesday the deal was completed at $2.2 billion last week. Oman's ministry of finance did not respond to a request for comment.

Oman's bonds jumped after Reuters reported the completion of the deal. Its bonds due in 2048 gained 1 cent to trade at 99.1 cents on the dollar, Refinitiv's Tradeweb data showed. That compared to a rise of just 0.09 cents for bonds due in 2047 from Bahrain, the only other 'junk'-rated Gulf sovereign.

Oman expects a 2021 budget deficit of 2.24 billion Omani rials ($5.82 billion). To make up the shortfall, the government aims to raise about 1.6 billion rials through borrowing and draw 600 million rials from its reserves.

It was the first Gulf government to tap the international bond markets this year, raising $3.25 billion in three-part bonds in January, taking advantage of positive market conditions to replenish state coffers battered by the coronavirus crisis.

The new loan has a 15-month maturity with the possibility to extend it by an additional 12 months at the borrower's discretion, sources said.

The loan's all-in pricing, including fees, was between 375 and 390 basis points over LIBOR, two of the sources said.

It attracted interest from more than a dozen international and regional lenders, which offered around $3 billion for the deal, one of the sources said.

Oman's external debt maturing this and next year amounts to $10.7 billion, or about 7.5% of gross domestic product, S&P Global Ratings has said. ($1 = 0.3850 Omani rials)

(Reporting by Davide Barbuscia and Yousef Saba; additional reporting by Saeed Azhar Editing by Louise Heavens, Andrew Heavens and Peter Graff) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))

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