Notwithstanding the current global economic downturn, the outstanding market value of the bonds and Sukuk segment of the Muscat Securities Market (MSM) grew a commendable 32 per cent to RO 2.63 billion at the end of 2017, up from RO 1.99 billion in 2016, according to the Executive President of the Capital Market Authority (CMA).
Shaikh Abdullah bin Salim al Salmi (pictured) attributed the strong growth trend — averaging 45 per cent annually over the last five years — to initiatives introduced by the CMA over the past several years aimed at facilitating the development of a vibrant fixed income market in the Sultanate.
Delivering the keynote address at the opening of the GBSA Oman Debt Capital Market Conference on Wednesday, Al Salmi said underlined the importance of a dynamic fixed income market to the development, financial stability, and diversification of the local economy.
“This is also an integral part of the overall strategy of the CMA, to enable the capital market to play its vital role, as an alternative fundraising platform for both the government and the corporates and to act as the engine for continuous economic development of Oman — which is in tandem with His Majesty Sultan Qaboos vision to develop, and diversify the overall financial market, and the national economy at large,” the Executive President stated.
The day-long conference, which was held at the Grand Millennium Hotel Muscat, was organised by the Gulf Bond and Sukuk Association (GBSA) with the support of Maisarah — the Islamic Banking Window of Bank Dhofar.
The burgeoning growth and size of the bonds and Sukuk market are evidence of the efforts of the Authority in putting in place the required building blocks necessary to facilitate the development of “an effective and dynamic fixed income market in Oman”, said the official.
Significantly, the total outstanding market value of the bonds and Sukuk market on the MSM of RO 2.63 billion in 2017, represents about 15 per cent of the total market capitalization of the MSM of RO 17.95 billion, Al Salmi said.
“If you compare it to five years ago, as at December 31, 2012, the total outstanding market value of the bond market on the MSM (there was no Sukuk issuance then) was only RO 801.19 million, which represents about 7 per cent of the total market capitalization of the MSM of RO 11.67 billion.
This translates to a remarkable growth rate of the bonds and Sukuk market in Oman of about 228 per cent for the last 5 years, or about 46 per cent on average annually,” he stated.
Moreover, the size of the bonds and Sukuk market of 15 per cent relative to the total market capitalization of the MSM in 2017 shows a positive shift towards the fixed-income market being used as a fund raising mechanism for companies in the capital market, over the last five years, the Executive President said.
Equally, the local market is also witnessing the issuance of a diverse variety of fixed income instruments, Al Salmi pointed out. The list includes conventional bonds (both corporate and the Government Development Bonds), perpetual bonds (both by banks and non-banks), standalone corporate Sukuk, Sukuk programmes, dual currency corporate Sukuk, local currency Omani Rial sovereign Sukuk and US dollar currency sovereign Sukuk.
Al Salmi voiced hope that the initiatives adopted by the CMA to support the growth of the fixed income market would encourage further bond and Sukuk issuances — particularly from the private sector — to help meet their funding requirements.
“Further bond and Sukuk issuances will also provide an essential liquidity management instrument and investment options, for both Islamic and conventional financial institutions, investment funds and Takaful/insurance operators in Oman — while attracting the required foreign investments into the country via the foreign investors,” he added.
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