BankMuscat to issue Certificate of Deposits by auction

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The CDs will be issued by way of auction process - one of its kind by any commercial bank in the region.

The Bank targets to issue OR250m of CDs in a year. The first issue size would be OR20m to the 'eligible investors'.

These can be held by Omani as well as non Omani individuals, corporate bodies and institutions including banks whether established in Oman or otherwise.

Applicants may submit up to 5 bids with different interest rates for each maturity of the issue, provided that each bid is for an amount of OR100,000 or multiples there of.

Speaking at the launch ceremony held at Grand Hyatt Muscat, AbdulRazak Ali Issa, Chief Executive, BankMuscat said:

'Our primary aim is to play a role in the development of the Rial Omani Yield Curve which is critical for the development of the debt markets in Oman. CDs will have fixed maturity dates of 12, 36 and 60 months from the date of issuance. Issue price would be decided by the investor/bidder while the coupon will be set by BankMuscat, which will be paid on Semi Annual basis. BankMuscat will follow the Dutch auction method for determining the best interest rate for the CDs which are governed and construed in accordance with Oman law.'

'Although redemptions before the maturity date are not permitted, the CDs are transferrable between the eligible investors and CDs will be redeemed on the maturity date at par value along with the accrued interest.', added AbdulRazak.

For the first issue, all applications can be made on 15th of September at BankMuscat's Head Office branch at CBD between 08:00 to 12:00 hours local time.

Allotments of the CDs will be done at 14.00 hours on the same day while the issue date will be the 2nd working day after the date of allotment i.e. 17th September 2008.

The coupons for the first issue will be announced to the market during the first week of September 2008.