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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Bond and sukuk listings bolster MSM debt market

Sohail-Niazi
Sohail-Niazi
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MUSCAT, APRIL 22 - As many as 26 bond and sukuk issuances have been listed on the Muscat Securities Market (MSM) as of December-end 2017, underscoring the growing role of the debt as well as the equity markets in supporting economic growth in the Sultanate, a key banking sector executive has stressed. Sohail Niazi (pictured), Chief Executive — Maisarah, the Islamic Banking window of BankDhofar, underlined the increasingly pivotal role of the capital markets as a source of finance for the public and private sectors amid ongoing fiscal and economic challenges. “In Oman debt and equity capital markets play an extremely important role in the development of country’s economy. They support the real economy by providing the necessary building blocks for creating a vibrant and well-functioning financial and economic system,” said Niazi.


“Oman continues its drive to actively pursue and implement Vision 2020 economic development plan with focus on diversification, industrialisation and privatisation. With its objective of reducing reliance on the oil sector and creating more employment opportunities for the rising number of young Omanis entering the workforce, the role of capital markets in this endeavour has become even more central to achieving these economic goals,” he added in a presentation at the Oman Debt Capital Markets Conference organised by the Gulf Bond and sukuk Association (GBSA) in Muscat last week.


Significantly, of the 26 bond and sukuk issues listed on the MSM as of end-2017, 15 are government bonds while 11 are corporate issuances. All but one of the corporate issuances were issued by financial institutions, the sole exception being an issue backed by a real estate developer, he noted.


In his presentation, Niazi described Oman’s successful record of bond sukuk issuances as “positive and healthy” developments. “This success will further stimulate debt capital markets, incentivise the development of new financial products and encourage Oman’s private sector to tap into debt markets,” he said.


Sukuk issuances, while still a relatively nascent activity, are already showing promise to become an important financial alternative to meet the funding needs of private sector in Oman, the CEO noted. A number of sukuk have been introduced since the launch of Islamic banking in the Sultanate, said Niazi. Talal sukuk was the first one to be listed on the MSM with a value of RO 50 million. Meethaq, the Islamic banking window of Bank Muscat, issued RO 44 million sukuk last year, while MB Holding raised $76 million through a sukuk private placement, he said.


“Most recently, Maisarah Islamic banking of BankDhofar has successfully set-up a RO 200 million programme, first of its kind for local real estate, logistics and hospitality company Golden Group. The first tranche of RO 50 million was closed at the beginning of this year.”


Niazi envisions an important role for Oman’s capital markets in nurturing economic development in the coming years. “As the economy picks up in 2018 and beyond, we expect that the debt and equity capital markets will be the key enablers and facilitators for the economic growth in the country,” he said.


Oman is home to a well-developed stock exchange, the Muscat Securities Market (MSM). Its overall market capitalisation was almost $47 billion at the end of 2017. After the slowdown in recent years, we have witnessed a resurgence in IPO activity in 2017, thanks to government driven offerings,” the CEO stated. IPO activity is expected to be sustained over the coming years as more power companies go public and the government moves forward with the plans to divest and partially privatize state-owned entities through listings, said Niazi.


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