OMAN’S DEBUT SOVEREIGN SUKUK ISSUE OVERSUBSCRIBED 1.7 TIMES

MUSCAT: Oman’s Ministry of Finance announced that its debut sovereign sukuk issuance received a very strong response and raised a total of RO336mn in firm orders from a wide base of investors comprising both conventional and Islamic institutions.

The five-year benchmark sovereign issuance was oversubscribed close to 1.7 times, a press release issued by the ministry said.

Against this strong committed order book, the ministry has finally accepted bids up to RO250mn at a cut-off yield of 3.5 per cent per annum to meet one of its objectives of offering an investment avenue to Islamic institutions in Oman.

The approval of the Capital Market Authority (CMA) has also been received for the final allocation, the press release said.

Mohammed Jawad bin Hassan, adviser to the Ministry of Finance and chairman of the Sukuk Committee, said, “The government had laid out very clear objectives for this debut sovereign sukuk issuance including offering investment avenues for Islamic financial institutions, Islamic funds and takaful operators in Oman to deploy their excess funds in a Sharia’a-compliant manner in the country, and to support the development of the capital market in Oman.

He said, “The successful closure of the issuance and its sizeable oversubscription with a committed order book of RO336mn in firm orders is a confident step towards meeting the needs of the Islamic finance industry in the country and to supporting the national objective of developing the capital market in Oman.”

It was the first time for a debt capital market issuance in Oman to be priced through a book-building process with a uniform price auction and this was a feature that was well received by the investors.

H E Abdullah al Salmi, executive president of the CMA, said, “We are delighted with the positive and strong response from a wide base of investors for the sovereign sukuk issuance despite the challenging environment. The success of this issue is an important step for the development of the capital market in Oman as it sets a benchmark for future issuances by the government and also by private-sector players to meet their development and funding needs, while diversifying the financing base and risk away from the traditional banking sector.”

The issuance is rated A1 by Moody’s Investors Service, in line with the sultanate’s rating. The issuance is structured as a sukuk-al-ijara, which is a lease-based structure widely known and recognised in the global Islamic finance industry.

The sukuk will be listed on the Muscat Securities Market (MSM). The Muscat Clearing and Depository Co (MCDC) is acting as the certificate holders’ agent, paying agent and registrar for the sukuk investors. Once listed, the sukuk certificates can be traded on the MSM through CMA-licensed brokers with clearing and settlement through the MCDC.