Oman readies US dollar bond sale – sources

Oman is preparing a sale of US dollar-denominated bonds, two sources familiar with the matter said, as the sultanate seeks to take advantage of improved conditions across emerging markets to finance its budget deficit.

It would be its first international issuance of 2019.

Less wealthy than its Gulf neighbours, Oman’s state coffers have been depleted by a slump in oil prices over the past few years and the country has increasingly relied on external borrowing to refill widening deficits.

The government said at the beginning of the year it planned to cover 86 per cent of this year’s expected budget deficit through local and foreign borrowing. That would correspond to around $6.2bn in debt.

The new bond issuance – the exact timing and size of which depends on market conditions – is “pretty much ready,” said one of the sources, declining to provide more details.

Oman’s finance ministry did not respond to a request for comment on the potential deal.

Oman has raised debt internationally over the past few years to levels that have created concerns among investors and pushed its credit rating to junk status.

S&P Global Ratings this month cut its outlook on Oman to negative from stable, saying the change reflected “the risk that in the absence of substantial fiscal measures to curtail the government deficit, or a more favourable external environment, fiscal and external buffers will continue to erode.”

Still, the country is not facing the risk of a debt crisis, an IMF official told Reuters earlier this year, if it implements planned fiscal reforms, like the introduction of a value-added tax.

The IMF estimates Oman to have a budget deficit of nearly 10 per cent this year, while the budget is expected to go down to 7 per cent in 2020, according to data released this week.

The fund said Oman would need oil prices to be at $97 per barrel to balance its budget this year.