Oman issues $519mn ten-year bonds, lures $715mn in offers

By bne IntelliNews February 22, 2015

The central bank announced it has sold out the 46th issue of government bonds worth OMR200mn ($519mn) and carrying a 4.5% annual coupon. The issue lured OMR275mn in offers. The bonds boast an average accepted yield of 3.51%.

The issue was opened for subscription during February 8-15 and the settlement date is on February 23. Interest on the bonds will be paid biannually on August 23 and February 23 each year until maturity date on February 23, 2025, the central bank said.

The bonds are direct and unconditional obligations of the government of Oman. They can be used as collateral to get loans from any local licensed bank, the central bank noted. The bonds can also be traded at prevailing market rates through the Muscat Securities Market.

In December last year, Oman sold the 45th issue of five-year government bonds worth OMR200mn and carrying a 3% annual coupon. The issue lured OMR322.2mn in offers. The bonds boast an average accepted yield of 2.08%.

Moody's affirmed on February 20 Oman's A1 government bond rating and changed the rating outlook to negative from stable.  Oman’s rating affirmation is underpinned by its economic and fiscal strengths and the government's large asset buffers. Those strong parameters will likely not be sharply undermined over the next year or two, according to Moody’s base case oil price scenario. Moody’s said that its base case scenario for oil market trends is a Brent crude price of $55 per barrel on average in 2015 that rises gradually to $75 per barrel by 2018.

On February 9, however, Standard & Poor's Ratings lowered its foreign and local currency sovereign credit ratings on the Sultanate of Oman to A-/A-2 from A/A-1.

S&P now forecasts an average of 3.7% of GDP current account deficit in 2015-2018. Furthermore, the agency anticipates larger fiscal deficits, equivalent to 4% of GDP in 2015 and 2% on average in 2016-2018.

The deficits will partly be financed by liquidating assets and partly by additional borrowing, according to S&P.

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