BUSINESS REPORTER -
MUSCAT, OCT 9 -
The Omani government’s recent RO 200 million sukuk issuance incorporated several novel features that distinguished it from previous issuances, according to the bond’s legal advisers.
The transaction involved the issuance of a third tranche of sukuk under the Government of Oman’s local sukuk issuance programme which followed the establishment of the programme and the issuance of the first two tranches of sukuk in late 2019.
Leading Omani law firm AMJ was sole legal counsel to the Government of Oman (as obligor), Oman Sovereign Sukuk Company SAOC (as issuer) and Bank Muscat and its Islamic window, Meethaq Islamic Banking, (as issue manager and lead manager) on the update of the Government of Oman’s Omani Rial unlimited value sukuk issuance programme and the issuance of sukuk aggregating RO 200 million ($519 million).
The issuance was undertaken in a single tranche of RO 200 million sukuk with a tenure of six years and a profit rate of 5.25 per cent per annum. The issuance closed on September 21, 2020 and was listed on the Muscat Securities Market.
“In addition to the issuance being undertaken through the novel auction process and allocations having been made through a ‘differential pricing mechanism’, this was the first time that collecting banks with respect to the issuance were appointed by the Central Bank of Oman through a circular issued to all licenced Omani banks,” said AMJ in a statement.
As part of its mandate, the legal firm had advised on the collecting banks’ appointment process and all transaction and structuring documents and liaised with the Capital Market Authority to finalise and obtain approvals for the update to the sukuk programme and the issuance of sukuk thereunder.
Earlier, in a statement, Oman’s Ministry of Finance had noted that the third issue of the sovereign sukuk programme would contribute to promoting the rapid growth of the Islamic financial sector in the Sultanate in line with government’s strategy to deepen the capital market and expand its scope in order to enable it to play a greater role in local economic growth.
The Sultanate, it said, has adopted a number of fiscal measures to rein in government spending and reduce the size of the growing deficit, notably by trimming public expenditure.
The ministry indicated that to meet financing requirements of the year, development bonds amounting to RO 550 million in value have been issued so far this year, while the government recently obtained a bridge loan of RO 770 million.
This is in addition to withdrawals from state reserves, among other funding methods.
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