OMAN: Raising up to $5bn in bonds and loans

GULF COUNTRIES - In Brief 14 Jan 2021 by Justin Alexander

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Today Oman is building a book for a bond issuance thought to be targeting $2-3bn. The bonds are a tap on the 2025 issuance from last October along with new 10 and 30 year tranches (Rt, BB). This follows the $2.5bn issued in October/November and comes at the same time that it has also mandated banks to raise a $1.1-2bn syndicated loan with a 15-27 month maturity (Rt). If both reach their maximal targets then this would provide about half the financing needed in 2021. There is about $4.5bn in maturing debt as well as a budgeted deficit of $5.8bn which looks plausible (we also estimate that there will be up to $2.6bn in oil and gas costs that are being moved off-budget to Energy Development Oman and which will require separate debt financing). The loan is mainly being led by regional banks (Bank Muscat and Bank Dhofar in Oman, along with the UAE's Mashreqbank and Bahrain's Gulf International Bank), along with HSBC. The bond is more internationally targeted and includes Citigroup, JP Morgan, Standard Chartered and Natixis, along with Bank Dhofar, Gulf International Bank and Qatar's QNB Capital.This issuance comes at a time when Oman's medium-term planning has become clearer following electricity and water subsidy reform announced in December and the publication of its budget with a detailed five-year fiscal plan (see our 8 Jan report). The country has a very significant cliff to climb to bring its deficit back to manageable levels and also refinance a wall of maturing debt in the next two years. However, we are impressed with a change of tone under Sultan Haitham's leadership, particularly since the cabinet reshuffle in August.New developments this week include the publica...