To expand its capital market, Oman will sell its first sovereign Islamic bond this week, the sultanate’s Ministry of Finance has announced.
The country will open subscriptions for its first issue of sovereign sukuk on October 8 and close them on October 22, the ministry in an emailed statement.
Shariah-compliant banks in the country would benefit from the new move as it will provide them new investment opportunities.
“The debut sovereign sukuk is an important step in achieving this objective and also supports the government’s objective of developing the capital market in Oman,” said Mohammed Jawad bin Hassan, Adviser to the Ministry of Finance and Chairman of the Sukuk Committee.
Mohammed Jawad said that the “government has studied the Islamic finance industry and identified a need for investment avenues for Islamic financial institutions, Islamic funds and takaful operators in Oman to deploy their excess funds in a shariah-compliant manner.”
The rial-denominated issue will have a tenor of five years and will mature in 2020, with its profit rate set through a uniform price auction, according to the ministry.
The issue will be open to sophisticated investors – usually taken to mean fund managers, banks and other institutions, as well as wealthy individuals – with a minimum subscription of OMR500,000 ($1.3 million), the ministry added.
Bank Muscat, its Islamic window Meethaq and Standard Chartered will lead-manage the sale of the sovereign sukuk, which will be structured as a Sukuk Al Ijara, a lease-based structure that is widely known and recognised in the global Islamic finance industry and investor community, the statement said.
(OMR1 = AED9.74, at the time of publishing)