Sultanate of Oman $5 billion three tranche sovereign bond issue

Overview:

• The Sultanate of Oman sold a $5 billion Rule 144A/Reg S sovereign bond - the country's largest debt capital markets issue to date - as it raised funds to fill a budget deficit caused by the low oil price.
• Listed on the Irish Stock Exchange, the bond was sold in tranches of $1 billion 3.875% notes due 2022, $2 billion 5.375% notes due 2027, and $2 billion 6.5% notes due 2047.
• In January, Oman announced it expected a budget deficit of around €7.8 billion in 2017, explaining it intended to use the international markets to raise around two thirds of the shortfall and the remainder would be covered from its reserves and by borrowing domestically. 
• The bond means Oman has turned to the debt markets to offset the loss of oil revenues in consecutive years having issued €4.5 billion in sukuk and bonds in 2016 under similar circumstances. 
• A number of Middle East states have issued bonds in reaction to declining oil profits; other recent examples include Iraq's $1 billion issue and Bahrain's $600 million eurobond tap issue in early 2017.  
• Bank Muscat, Citi, Deutsche Bank, HSBC, ICBC Standard, JP Morgan, Société Générale, and Standard Chartered Bank were joint-lead managers on Oman's $5 billion bond. 

Ben Naylor - Regional editor