KUALA LUMPUR, Sept 3 Oman is expected to issue
500 million rials ($1.3 billion) worth of conventional and
Islamic sovereign debt early next year, and aims to choose the
arranging banks in October, said the head of the country's first
full-fledged Islamic bank.
Last month, the finance ministry received applications from
banks to arrange the issuance, with plans to raise 300 million
rials via conventional bonds and 200 million rials with sukuk,
said Jamil Al Jaroudi, chief executive of Bank Nizwa.
"We expect it to be in the market in the first quarter of
2015," Jaroudi told Reuters on the sidelines of the Global
Islamic Finance Forum.
The issuance would be in local currency and would apparently
be separate from an international, U.S. dollar-denominated
sovereign bond issue which Oman has said it may conduct.
The government currently issues little debt beyond domestic
issues of development bonds worth around 100 million rials. But
government spending has been rising sharply in the last few
years, increasing pressure on the government to develop its
presence in the debt markets.
The sovereign sukuk would be the government's first issue of
Islamic bonds, and would be welcomed by the sultanate's nascent
Islamic finance industry, which currently has access to only a
small number of sharia-compliant investment products.
Oman began to introduce Islamic finance in 2012, becoming
the last of the six Gulf Cooperation Council states to do so,
and its Islamic capital market is undeveloped. The central bank
has said it will wait for a sovereign sukuk issue before
developing its own set of sharia-compliant money market tools.
"When we started as an Islamic bank we didn't have a place
to put our money before deploying it as capital. Until now we
don't have a sovereign instrument tool to manage" interbank
funding needs, Jaroudi said.
Last November, Omani real estate developer Tilal Development
Co sold 50 million rials of sukuk, the country's first and only
corporate sukuk issue.
In May this year, the Islamic unit of Bank Muscat,
Oman's largest lender, said it planned to issue as much as $300
million worth of sukuk, pending regulatory approval.
Oman has two full-fledged Islamic banks, Bank Nizwa and
Alizz Islamic Bank, as well as several Islamic windows
at conventional banks, including Bank Sohar, Bank
Dhofar, Bank Muscat, Ahli Bank and
National Bank of Oman.
(1 US dollar = 0.3850 Omani rial)
(Reporting by Al-Zaquan Amer Hamzah; Writing by Bernardo
Vizcaino; Editing by Andrew Torchia)