MUSCAT: CBO To Issue RO200mn In Development Bonds

Muscat – The CBO is preparing to launch a RO200mn government development bond (GDBs) issue. H E Hamood al Zadjali, executive president of CBO, said on Thursday that the central bank will announce the bond issue for the local market ‘within a few days.’

Speaking to reporters on the sidelines of the Asian Bankers Association conference, H E Zadjali said, “The plan to issue bonds or sukuk next year will depend on the budget. Within a few days we will announce an issue of GDBs of about RO200mn for the Oman market. The bonds are expected to have a maturity of five years and the coupon rate will be fixed.”

He said the RO200mn issue would roll over RO100mn of debt, which is maturing this month, and cover a budget deficit in 2014. “Subscription may start towards the end of this month and be open for two weeks. We are still working on the details,” H E Zadjali added.

On the government’s plan to raise money by issuing sukuk, he said, “We hope it will happen next year based on the need of the government. Issuing sukuk needs some sort of arrangement because it is not as straight forward as GDBs, which are much easier to launch. Unlike bonds, sukuk has to be backed by assets. So the government has to choose what sort of assets are in demand that can be employed. It will be good instruments to invest in according to Sharia’a principles and regulation.”

He added that Oman’s first sovereign sukuk issue will probably be for the local market, but if the need arises a global sukuk issue can also be considered.