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UPDATE 1-Oman reopens dual-tranche bond sale, raises $500 million

(Adds launch, details, background)

DUBAI, Nov 23 (Reuters) - Oman raised $500 million on Monday through a reopening of two bonds issued last month, drawing orders of more than $3 billion for the additional tranches, a document showed.

Rated below investment-grade by all major credit ratings agencies, Oman has piled on debt over the past few years and faces a yawning fiscal deficit of 10% this year, according to an International Monetary Fund forecast.

The Gulf state initially sold the bonds due in October 2027 and October 2032 last month, raising $2 billion. Orders totalled $3.8 billion amid subdued investor appetite but the bonds have since performed well.

“They always intended to do more than $2 billion so this is a good way to top up now the bonds have finally performed,” a debt banker away from the deal said.

Monday’s sale on the same terms saw Oman sell $200 million of the 2027 bonds at a yield of 6.3% and $300 million of the bonds due in 2032 at a yield of 6.9%, the document from one of the banks on the deal showed.

It tightened both tranches by 30 basis points from its initial price guidance earlier on Monday.

The outstanding bonds due in 2027 were issued at a yield of 6.75% and were trading at 6.305% on Monday, according to Refinitiv data. Its 2032 bonds were issued with a yield of 7.375% and were trading at 6.973% on Monday.

The prospectus for last month’s bond sale said Oman had begun preliminary discussions with some Gulf countries about financial support. Bahrain, the only other “junk” rated Gulf country, averted a credit crunch in 2018 when it was bailed out with a $10 billion aid package from its wealthy Gulf neighbours.

Sources told Reuters last week that Oman is in talks for a loan of around $1 billion.

Oman’s finance ministry did not respond to a request for comment on the debt sale.

Citi, HSBC, Natixis and Standard Chartered arranged the deal, according to the document.

Those banks, along with Bank Muscat, First Abu Dhabi Bank and Societe Generale arranged last month’s $2 billion bond sale. (Reporting by Yousef Saba; Editing by Catherine Evans)

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