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DUBAI, May 24 (Reuters) - Oman has raised $2 billion in Islamic bonds, pricing at par a seven-year sukuk with a profit rate of 4.397 percent, a document issued by one of the banks leading the deal showed.
The order book for Oman's bond was in excess of $6.9 billion, demonstrating that despite Oman's financial vulnerabilities, highlighted by a recent credit downgrade by rating agency Standard & Poor's and a spike in its external debt position, demand for its paper remained hefty.
In March, when Oman issued a triple-tranche $5 billion conventional bond, the order book topped $20 billion.
The pricing of Oman's debut public sukuk was in line with portfolio managers' expectations ahead of the bond launch, although some investors said they expected more upside given the large size of the deal.
The bond was "flattish" in the secondary market on Wednesday, said a Dubai-based trader, while a portfolio manager said the sukuk was gaining value in early trading activity but headed back to its par value after London opened.
In its push to replenish its coffers, strained by low oil prices, the Gulf state is also in the process of raising $3.6 billion through a syndicated loan to be provided by Chinese banks.
Oman's funding needs are expected to remain significant this year because of slow fiscal consolidation and a widening account deficit, a research report by Standard Chartered showed.
The bank estimated Oman's debt would go up to 35 percent of its GDP this year from 4.8 percent of GDP in 2014.
Alizz Islamic Bank, Citi, Dubai Islamic Bank, Gulf International Bank, HSBC, JP Morgan and Standard Chartered Bank were the sukuk bookrunners.
(Reporting by Davide Barbuscia; editing by Jason Neely) ((Davide.Barbuscia@thomsonreuters.com;))
The order book for Oman's bond was in excess of $6.9 billion, demonstrating that despite Oman's financial vulnerabilities, highlighted by a recent credit downgrade by rating agency Standard & Poor's and a spike in its external debt position, demand for its paper remained hefty.
In March, when Oman issued a triple-tranche $5 billion conventional bond, the order book topped $20 billion.
The pricing of Oman's debut public sukuk was in line with portfolio managers' expectations ahead of the bond launch, although some investors said they expected more upside given the large size of the deal.
The bond was "flattish" in the secondary market on Wednesday, said a Dubai-based trader, while a portfolio manager said the sukuk was gaining value in early trading activity but headed back to its par value after London opened.
In its push to replenish its coffers, strained by low oil prices, the Gulf state is also in the process of raising $3.6 billion through a syndicated loan to be provided by Chinese banks.
Oman's funding needs are expected to remain significant this year because of slow fiscal consolidation and a widening account deficit, a research report by Standard Chartered showed.
The bank estimated Oman's debt would go up to 35 percent of its GDP this year from 4.8 percent of GDP in 2014.
Alizz Islamic Bank, Citi, Dubai Islamic Bank, Gulf International Bank, HSBC, JP Morgan and Standard Chartered Bank were the sukuk bookrunners.
(Reporting by Davide Barbuscia; editing by Jason Neely) ((Davide.Barbuscia@thomsonreuters.com;))
