Oman appoints banks ahead of debut public dollar sukuk

Oman has appointed banks to arrange a global fixed income investor call ahead of a potential dollar sukuk issuance which would be the first public international sale of Islamic bonds by the Gulf state.

The planned sale, expected to raise around $2bn, would be in addition to a $3.6bn syndicated loan that Oman is in the process of agreeing with Chinese lenders.

Rating agency Standard & Poor’s downgraded the Sultanate to “junk” status last week, citing the erosion of the country’s external reserves and Oman’s vulnerability to potential volatility in oil prices.

Despite its budget deficit and the weakening of external buffers, Oman issued in early March a successful $5bn international bond – its largest ever – which drew orders in excess of $20bn.

Oman has mandated Al Izz Islamic Bank, Citi, Dubai Islamic Bank, Gulf International Bank, HSBC, JP Morgan and Standard Chartered Bank for the planned seven-year sukuk. The banks will arrange a global investor call on May 22.

The offering could also include a 12-year tranche, a document issued by one of the banks leading the deal showed.

Oman returned to the international debt capital markets last year for the first time since 1997.

It raised a total of $4.5bn through five- and 10-year conventional bonds in June, followed by a tap of those bonds in October. It also sold a $500m six-year sukuk in June under a private placement.

In March, the sovereign raised debt at maturities of five, 10, and 30 years.

Oman is rated Baa1 with a stable outlook by Moody’s, BB+ with a negative outlook by S&P, and BBB with a stable outlook by Fitch.