BankMuscat plans to raise RO15m in 7th round of CD auction

The CDs will be issued on 18 June 2009 in three categories with maturity of 18, 36 and 60 months with coupon of 4.00%, 4.50% and 5.25% respectively.

To partly address the needs of local investors who are looking for investing funds beyond one year, the Bank for the first time is issuing 18-month maturity CDs instead of 12-month CDs issued in earlier auctions. The minimum subscription will be for RO100,000 and thereafter in multiples of RO100,000.

Eligible investors include Omani and non-Omani individuals, corporate bodies and institutions established in Oman and otherwise.

BankMuscat plans to mobilise RO250m from CDs over one year and so far received bids for RO192.1m and allotted RO86.2m. The weighted average yields have set for initiation of yield curve and if one goes by trends, the interest rates are looking downwards in the shorter run.

The overwhelming support evoked in the previous rounds of CD auction indicates the strong appetite among financial institutions to absorb the high-yielding BankMuscat products. The issuance of CD is yet another strategic initiative adopted by BankMuscat to bolster funds at its disposal.

CD applicants may submit up to five bids for different interest rates. The Bank will issue the CDs by determining the best interest rate, on the basis of ascending order of interest rates (bid rates) beginning with the lowest yield and up to the point at which the entire CD amount has been subscribed.

If there are more bids at the last accepted yield than is available to be allotted, then the allotment for such applicants will be made on a pro rata basis. The interest is payable semi-annually and CDs are transferable among eligible investors in lots of 1 (RO100,000) or in whole numbers. They will be redeemed at par value together with accrued interest on the maturity date.

Proceeds from the issue of CDs will be used for general corporate purpose of the Bank.

BankMuscat's CD initiative paves the way for larger benefits to the financial market in general and to the economy as a whole. It encourages better savings culture and provides a reliable avenue to invest surplus funds. The Bank plans monthly issue of CDs, which will ultimately lead to the development of a stable and reliable local currency benchmark.

All applications can be made at BankMuscat's Head Office branch at CBD between 08:00 to 12:00 hours local time on 15 June 2009 with allotments at 14.00 hours on the same day. The issue date will be after two working days from the date of allotment i.e., 18 June 2009.