Future Crude Sales Said to Back $3.4 Billion Loan for Oman

  • HSBC Holdings is the sole international advisor for loan
  • Petroleum Development Oman raising funds for government

The Omani government is seeking to raise a loan of about $3.4 billion via state-owned Petroleum Development Oman.

The company, which is acting on behalf of the government, plans a five-year pre-export finance facility to “fund its operations in response to the current low oil price environment,” it said in a response to Bloomberg questions. The loan will be backed by crude revenue and raised through an orphan special purpose vehicle that will funnel the funds to the government, two people familiar with the matter said earlier today.

The announcement comes in the same week Oman meets fixed-income investors for a possible international bond sale. The Gulf Cooperation Council member, which has less than 1 percent of the world’s proven oil reserves, is preparing to follow dollar-denominated offerings from Qatar and Abu Dhabi as it grapples with the decline in crude. Gulf bond sales jumped to $28.5 billion so far this year, a record for the period, according to data compiled by Bloomberg.

“Oman is clearly in a weaker fiscal position than the rest of its GCC peers and the decision to secure funding by pledging future oil revenues will result in more favorable pricing terms,” Apostolos Bantis, a Dubai-based credit analyst at Commerzbank AG, said by telephone.

HSBC Holdings Plc is the sole international financial adviser and the syndication was initially started with 10 international banks, the company said. Oman in January raised $1 billion via a loan and was last month said to be seeking a privately-placed sukuk, according to people with knowledge of the deal.

Petroleum Development Oman is 60 percent owned by the government, according to its website. It accounts for more than 70 percent of the country’s crude production and almost all of its natural gas supply.

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