DUBAI Jan 3 The government of Oman has
approached banks for an international bond issue with tranches
of five and 10 years as the country plugs a budget deficit
caused by lower oil prices, banking sources familiar with the
situation said on Tuesday.
The sultanate has asked international lenders to submit
proposals for a U.S. dollar debt transaction likely to be around
$1 billion or more. Banks are expected to submit their proposals
by the end of this week, said the sources.
One source said the government was keeping an open mind on
whether the issue would be in the form of conventional bonds or
Oman's undersecretary of finance Nasser al-Jashmi told
Reuters: "As part of executing our funding plan, we have
recently issued a request for proposals to a number of banks to
act as issue managers.
"We expect to receive the proposals shortly and will
finalise our selection process by end-January to start working
on potential issuance later during the year."
He added: "Our external funding plan includes issuance of
both conventional bonds and sukuk, as well as a term loan from
the bank market."
The new bond deal will most likely involve banks that
arranged debt issues for Oman last year, the banking sources
said. That suggests banks such as Citi, National Bank of Abu
Dhabi and Natixis are likely candidates as lead banks.
Oman's budget deficit is forecast to be 3 billion rials
($7.8 billion) in 2017, according to the sultanate's budget
plan, published this week.
The finance ministry said it would cover this year's deficit
with 2.1 billion rials of international borrowing, 400 million
rials of domestic borrowing and the drawdown of 500 million
rials from financial reserves.
Last year, the government raised a $1 billion international
syndicated loan in January and issued a five- and 10-year $2.5
billion international bond in June, followed by a $1.5 billion
tap of the same bond in September.
(Additional reporting by Fatma Alarimi in Muscat; Editing by