Monday, February 6, 2023

Correction of the budget deficit? Oman prepares for third bond sale in three months | News on the coronavirus pandemic

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The biggest oil exporter outside of OPEC sells $ 3.25 billion in three-part debt.

Oman is back in the debt market for the third time in less than three months, capitalizing on investor appetites for yield to help close the largest budget deficit in the Arab Gulf region. The biggest oil exporter outside of OPEC sells $ 3.25 billion in three-part debt.

  • Oman has set final terms of 6.25% on $ 1.75 billion in 10-year notes, according to people familiar with the matter, against an initial price target of 6.625%.
  • It sells another billion dollars in 30-year securities at 7.25%, against a forecast of 7.5% and an initial price of 7.625% at 7.75%.
  • Also tapping $ 500 million of its 2025 4.45% bond; Earlier forecast was 4.625% to 4.75%, and the initial price was 4.875%, the people said, asking not to be identified as details are confidential.

Oman may need to borrow around $ 4.2 billion this year to cover a budget deficit that has swelled after the drop in oil prices and the coronavirus pandemic hit the finances of one of the weaker rulers of the Gulf.

The sultanate is trying to convince investors concerned about the decrease in its reserves by reducing its spending and by introducing a 5% value-added tax this year. He also created a new state-owned energy company last year, with the intention of using his largest oil block to take on debt.

Investors are concerned about the “execution risks” of Oman’s plans, said Abdul Kadir Hussain, Dubai-based head of fixed income asset management at Arqaam Capital. “The market will probably be a little nervous until it sees how things develop on these fronts.”

Oman is also in talks to secure budget support from some of the region’s neighbors, allaying fears about any risk of devaluation pressure on its monetary anchor.

The sultanate’s dollar debt jumped 11% in the fourth quarter, more than triple the average gain of 3.2% among Arab Gulf peers as global investors sought higher yields. Yields on the country’s $ 2.75 billion bonds due January 2048 have jumped 34 basis points to 7.08% since falling to their 10-month low on the 8th. January.

The country last raised $ 500 million through its bonds maturing 2027 and 2032 in November. It returned to international debt markets for the first time in over a year in October, when it raised $ 2 billion in seven- and 12-year bonds.

Citigroup Inc., HSBC Holdings Plc, JPMorgan Chase & Co. and Standard Chartered Plc are the global coordinators of the latest sale, joined by Bank Dhofar SAOG, Gulf International Bank BSC, Natixis SA and QNB Capital as joint lead managers.


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