Oman Considers Dollar Bond Issue In 2014 – Central Bank

Oman’s government is considering a proposal to issue dollar-denominated sovereign bonds sometime in 2014, which could lead to regular debt sales in the future, the oil exporter’s central bank said on Wednesday.

“By re-establishing Oman’s presence in the international bond market, a sovereign issue could pave the way for regular deficit financing through bond issues in future, if need be,” it said in its first ever financial stability report.

The International Monetary Fund presented a bleak outlook for Oman’s public finances last month, predicting the budget could slip into a deficit of 3.8 per cent of GDP as soon as 2015, with the gap widening to as much as 13.3 per cent in 2018.

Oman’s finance minister Darwish al-Balushi told Reuters earlier this month that the sultanate could issue a dollar bond of benchmark size, typically at least $500 million, next year to facilitate debt sales by the private sector.

The non-OPEC oil exporter’s only previous international bond was a $225 million Eurobond sold in March 1997, when oil prices stood at around $20 per barrel.

Oman will need oil prices to average $94.1 per barrel this year and $104.4 in 2014 to be able to balance its budget, the central bank said, citing the IMF estimates. That is less than an estimate of $104 Balushi gave in January.

The government has raised planned spending by nearly 20 per cent this year compared to 2012, to OMR12.9 billion ($33.5 billion), partly to help maintain social peace following the wave of unrest that started in the Arab world in 2011.

“The significant rise in the break-even oil prices themselves is a risk factor that needs to be kept under check,” the central bank said.