markets

Oman Plans $1 Billion Infrastructure Fund

Updated on
  • Sovereign wealth fund to boost transport, energy investments
  • Fund is said to be in talks with banks and potential investors
A detail of the Royal Opera House Muscat illuminated at night is shown in Muscat, Oman. Photographer: Ayesha Daya

Oman’s sovereign wealth fund is planning to start a $1 billion infrastructure fund to boost investment in projects including the Gulf state’s road, transport and energy systems, according to people familiar with the matter.

The State General Reserve Fund is talking to international banks and potential investors for the financing, the people said, asking not to be identified because the information is private. The projects in which the funds will be deployed have not been finalized, they said. Repeated calls to the fund’s offices in Muscat and the Ministry of Finance weren’t answered, while an email sent to an address on the fund’s website bounced back.

The country is turning to public-private partnerships to plug gaps in its infrastructure program, which is being hindered by tighter government finances. Oman, like other states in the oil-rich six-nation Gulf Cooperation Council, has been battered by a plunge in crude prices since mid-2014 that has caused budget deficits to swell and borrowing to surge. The nation’s bonds are rated junk by S&P Global Ratings and have among the lowest investment grades from Moody’s Investors Service and Fitch Ratings.

The Middle East’s biggest non-OPEC oil producer last week became the first developing nation to tap international capital markets by issuing $6.5 billion of five-, 10- and 30-year bonds, fueling concerns an increase in debt may pressure its credit ratings. Yields on the nation’s $2.5 billion of debts due in January 2028 have declined 22 basis points to 5.43 percent by 9:47 a.m. in London Tuesday since being issued.

To read more about Oman’s plans to merge its sovereign wealth funds, click here.

Oman’s capital market authority introduced regulations for real estate investment funds at the start of this year in a bid to stimulate the property sector. Saudi Arabia’s Public Investment Fund is said to have held talks with local and international banks and could raise about $5 billion this year as it seeks to diversify the kingdom’s oil-dependent economy and boost returns from investments.

(An earlier version of this story corrected a reference to Oman having a junk rating from all three major ratings companies in the third paragraph.)

(Updates with yields on bonds in fourth paragraph.)
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