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Oman Tightens Price on $2 Billion Sukuk Amid Rush of Orders

  • Sultanate tightens pricing offer to MS +235 basis points
  • Issuer gets over $6.9 billion in investor bids at final spread

Oman’s $2 billion Islamic bond sale on Tuesday lured orders for more than three times the issue size, allowing it to cut the price offered to investors as it seeks funds to help trim a budget deficit.

The sultanate set final terms on its seven-year sukuk at 235 basis points over the mid-swap rate, from initial guidance of about 270 basis points, according to a person familiar with the deal. Money managers bid over $6.9 billion for the new issue at the final spread, the person said, asking not to be identified because the information is private.

Oman is the largest Arab oil producer outside OPEC and a halving of crude prices since 2014 left it with a budget gap of almost 22 percent of economic output in 2016, according to the International Monetary Fund. S&P Global Ratings cut the country’s credit score to sub-investment grade status on May 12 citing volatile export revenue and heightened external financial needs.

“There was a good demand and now a rush to get an allocation with accepting even less yield,” said Lutz Roehmeyer, who manages about $2.5 billion at Landesbank Berlin Investment and bid to buy the new issue even after the country tightened pricing.

Read More: IMF view on Oman’s growth outlook

Alizz Islamic Bank, Citigroup Inc., Dubai Islamic Bank, Gulf International Bank, HSBC Holdings Plc, JPMorgan Chase & Co. and Standard Chartered Plc are managing the deal. The country’s last foray into international debt markets was a $5 billion three-part offering of dollar bonds in March.

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