Oman’s first sovereign sukuk issue attracts strong orders

MUSCAT, Oct 25 (Reuters) – Oman’s first issue of sovereign Islamic bonds has received strong orders ahead of its final pricing on Tuesday, state news agency ONA quoted an official as saying on Sunday.

The 200 million rial ($520 million), five-year sukuk issue with an ijara format drew 22 orders totalling 336 million rials during the subscription period, which ran from Oct. 8 to 22, Mohammed Hussain Jawad, advisor at the finance ministry and head of the committee handling the issue, told ONA.

Results of the sale and allocations will be announced on Nov. 3.

Jawad also said the ministry planned a second sukuk issue next year, but he did not elaborate on the size or timing.

The first issue is a step towards developing Oman’s Islamic finance industry and gives the government a fresh channel to raise money.

It was open to sophisticated investors – usually taken to mean fund managers, banks and other institutions, as well as wealthy individuals – with a minimum subscription of 500,000 rials.

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The issue will give the country’s Islamic banks, insurance firms and funds a badly needed tool to manage their money more efficiently, which could help them to become more profitable.
Oman launched Islamic finance, which follows religious rules such as a ban on interest payments, later than other Gulf Arab countries, granting licences to two sharia-compliant banks, Al Izz Islamic and Bank Nizwa, in 2013.

There are also half a dozen Islamic windows of conventional institutions; together, the banks and windows account for about 5 percent of the country’s total banking assets.

The sovereign sukuk, which will be listed on the Muscat Securities Market, may provide a benchmark which encourages private Omani companies to issue Islamic bonds.

The issue also allows the government to begin tapping a new source of funding at a time when low oil prices are slashing its export revenues and hurting its finances. The government has boosted domestic sales of conventional bonds this year to cover a big budget deficit.

Bank Muscat, its Islamic window Meethaq and Standard Chartered are lead-managing the sukuk sale.

(Reporting by Fatma Alarimi; Writing by Andrew Torchia) ((; +9715 6681 7277; Reuters Messaging:

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