Oman raised $1.75bn via a 9Y sukuk at a yield of 4.875%, a strong ~56.25bp inside initial guidance of 5.375-5.5% area. The sukuk were unrated and allocations were not available at the time of writing. Oman is rated Ba3/B+/BB-. The new sukuk were priced ~5bp tighter to its 6% bonds due Aug 2029s that currently yield 4.93% in the secondary markets. The sukuk were also priced tighter to lower-rated gulf peer Bahrain’s (B2/B+/B+) 6.75% bonds due Sep 2029 that are currently yielding 5.25%.

Raffaele Bertoni, head of debt capital markets at Gulf Investment Corporation said that lack of supply of dollar Sukuk and Oman’s $1.5bn bond maturity this month saw large demand for the new issue. This is Oman’s first dollar sukuk issuance since 2018. “The pricing is reflective of pent-up demand in the sukuk space,” said Abdul Kadir Hussain, head of fixed income asset management at Arqaam Capital. Reuters says that according to the prospectus, Oman forecasts a deficit of OMR 2.23bn ($5.8bn) in  2021, OMR 1.66bn ($4.3bn) in 2022 and OMR 605mn ($1.6bn) in 2023 and OMR 165mn ($429mn) in 2024, or 8.6%, 5.9%, 2% and 0.5% of GDP respectively.

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