The nine-year sukuk worth $1.75 billion that the Gulf country put out on Tuesday attracted more than $11.5 billion in applications.
Market sources said that the sukuk rose on Wednesday, June 9, by about one cent to the dollar, in what is known as the gray market.
An S&P Global model shows that for the first time in more than two years, credit risk swaps do not take into account a downgrade of Oman’s credit rating.
Today, Morgan Stanley said he favored Oman, which is among the top performers on the emerging market bond index for Bahrain, and is the only other Gulf country rated as junk.
The Sultanate of Oman is a relatively small oil producer and is more sensitive to its price fluctuations than its oil-rich Gulf neighbors, which means that the Sultanate will be hit particularly hard by the historic price collapse in 2020 due to the Corona virus.
Its debt as a percentage of GDP rose to about 80% last year, after it was just over 5% in 2015.
“Although our optimism about the rally has waned, we still have a positive bias, we believe it is too early to reduce exposure while continuing to consolidation,” Morgan Stanley said in a research note.
The sultanate faced what bankers described as weak demand when it turned to the debt markets last year.
However, the plan to stabilize public financial conditions and the recovery of oil prices helped Oman to become the first Gulf country to issue bonds this year, as it raised last January about $3.25 billion in conventional bonds in a deal that attracted subscription requests of more than $15 billion.
“With the latest issuance, Oman has refinanced bonds maturing in 2021 and the deficit this year, allowing the government to focus on reducing the budget deficit,” said Rafael Bertone, head of debt markets at the Gulf Investment Corporation.
Nick Eisinger, Head of Emerging Markets Fixed Income at Vanguard, said the sukuk, an instrument for which demand has long been outpaced, is lower than Oman’s traditional bonds but “still an adequate size”.