Oman's $2bn international sukuk oversubscribed more than thr...| MENAFN.COM

Friday, 24 March 2023 05:55 GMT

Oman's $2bn international sukuk oversubscribed more than three times

(MENAFN- Muscat Daily) Muscat- Oman's inaugural US$2bn international sukuk issuance witnessed a strong investor interest with an orderbook of US$6.9bn and over 300 participating accounts.

Oman made its inaugural foray into international public sukuk markets via a US$2bn seven year sukuk issuance on May 23. The sukuk follows the sultanate's US$5bn multi-tranche bond priced earlier this year.

The final order book represented nearly over subscription of nearly three times, a press release issued by the Ministry of Finance said on Monday.

The transaction was noteworthy in a number of ways and was able to fulfil several of the sultanate's key objectives: Establishing a tight and liquid sukuk benchmark, funding a significant part of the expected 2017 fiscal deficit and investor diversification.

'We are delighted to see the strength of the market and the continued confidence investors have shown in Oman. With this issuance we have successfully established a strong sukuk benchmark and diversified our offering into regional and Islamic investors who were the target investors for this offering,' said

H E Nasser Khamis al Jashmi, Undersecretary of the Ministry of Finance.

Despite coming close on the heels of a sovereign rating downgrade by S & P from 'BBB-/Negative' to 'BB+/Negative' the transaction saw significant demand from a global investor base, reaffirming investors' continued confidence in the sultanate's long-term credit fundamentals.

The US$2bn issue size also represents the largest ever deal size achieved for a seven year international sukuk. The strong investor demand supported the significant price tightening of 35 basis points (bps) from initial price thoughts and enabled Oman to price 15bps inside its conventional bond curve.

Moody's and Fitch rated Oman's sukuk at Baa1 and BBB, respectively, and pricing was in line with the sovereign's BBB rated peers.

The issuance was coordinated by a lead manager group comprising of alizz islamic bank, Citi, Dubai Islamic Bank, Gulf International Bank, JP Morgan, HSBC and Standard Chartered Bank.

The sukuk issuance was able to achieve sizeable well diversified investor interest across investor types and geographies. Investor distribution by geography was split across 65 per cent distribution into MENA, 22 per cent Europe, seven per cent Asia and the remaining six per cent to the US.

By investor type, 56 per cent of the issuance went to banks, 32 per cent to fund managers, seven per cent to central banks, agency, pension funds and insurance companies with five per cent being sold to private banks. Islamic investors represented 46 per cent of the issuance.

With the US$2bn raised via the sukuk together with the US$5bn Oman raised via its multi-tranche conventional bond issuance earlier in the year, the sultanate has now met significant portion of the funding requirements tied to its anticipated budget deficit for 2017. The seven year maturity also allows the sultanate to balance and spread its maturity profile.


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