(Adds background, details)
By Yousef Saba
DUBAI, June 7 (Reuters) - Oman has hired banks for its
second international bond sale of the year, a planned issuance
of nine-year U.S. dollar-denominated sukuk, a document showed on
Monday, as it seeks to plug a large budget deficit.
Oman hired Citi, Gulf International Bank, HSBC
, Standard Chartered, Bank ABC and Bank Muscat
to arrange investor calls starting on Monday, the
document from one of the banks seen by Reuters showed. An
issuance of sukuk, or Islamic bonds, will follow, subject to
market conditions.
Oman, one of the weakest credits in the hydrocarbon-rich
Gulf, is a relatively small oil producer and more sensitive than
its neighbours to swings in the oil price, meaning it was hit
particularly hard by last year's historic price crash and the
COVID-19 pandemic.
It forecasts a 2021 deficit of 2.23 billion rials ($5.79
billion), or 8.6% of gross domestic product, the prospectus for
the sukuk showed, falling to 1.66 billion rials in 2022, 605
million rials in 2023 and 165 million rials in 2024, or 5.9%, 2%
and 0.5% of GDP respectively.
"Oman expects that it will continue to have substantial
financing needs as a result of ongoing low oil prices and the
continued impact of the COVID-19 pandemic, in anticipation of
which, Oman is pursuing a diversified and comprehensive funding
plan," the prospectus said.
Financing needs will be partly met through privatisations,
monetisation of government assets and "limited" use of domestic
funding sources such as government development bonds and
domestic sukuk issues.
The sultanate, which is the only Gulf sovereign with a
"junk" credit rating apart from Bahrain, has already raised a
$2.2 billion loan and $3.25 billion through a three-part bond
sale this year.
The prospectus noted Oman's interest burden is likely to
increase as a result of expectations for increased external
borrowing.
"Over time, maturing external debt may need to be refinanced
at higher costs, especially if Oman's ratings were to be further
downgraded."
($1 = 0.3850 Omani rials)
(Reporting by Yousef Saba; Editing by Edmund Blair, Kirsten
Donovan)
Standard Chartered (STAN)
HSBC Holdings (HSBA)
