Oman’s government is in no hurry to follow its peers across the Middle East who kicked off the year by offering new bonds at higher yields.
“We aren’t desperate to go early,” said Nasser al-Jashmi, the undersecretary at Oman’s Ministry of Finance. “Market conditions aren’t appropriate right now and we have flexibility within our funding plan,” he told Bloomberg last Wednesday on the sidelines of a meeting of Arab finance ministry officials.
After ending a two-decade absence from international capital markets three years ago, Oman has grown increasingly reliant on borrowing amid efforts to reform its economy after oil prices collapsed in 2014. The Gulf nation, whose budget deficit is among the largest of all the sovereigns tracked by Fitch Ratings, is planning to raise 2.4bn rials ($6.2bn) internationally and at home this year to help fund most of its fiscal shortfall. It borrowed $8bn abroad in 2018, al-Jashmi said.
Turkey and Oman’s neighbour were the first in the Middle East to test the appetite for riskier assets last week after growing optimism about a slower path of interest-rate increases by the US Federal Reserve. The kingdom sold $7.5bn in dollar debt and Turkey issued $2bn of notes, with both pricing the bonds at a premium over existing curves.
Oman will likely raise the money in the first and second halves of the year, “depending on market conditions,” according to al-Jashmi. It’s monitoring the situation and is talking to banks and advisers on the best time to issue, he said.
The yield on Oman’s bonds due 2028 has steadied near 7.2% after peaking at the start of 2019 at over 7.6%, the highest since the securities were sold a year earlier. S&P Global Ratings has Oman’s sovereign credit score two levels into junk with a stable outlook, while Moody’s Investors Service puts it at the lowest investment grade with a negative view.