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This deal stands out for opening a new market. It was the first sukuk issue by the Sultanate of Oman and has the potential to kick-start the development of Islamic finance in a country that has been strangely lacking in it.
It helps, perhaps, that Gulf states suddenly need money for the first time in years. The low oil price has brought deficits to GCC states that have grown quite used to automatic surpluses, and Oman does not have the same hydrocarbon wealth as most of its peers.
Oman does have Islamic financial institutions, as well as Shariah funds and takaful (Islamic insurance) operators, and the sukuk would create a useful source for their excess funds. It would also create a benchmark for other Omani institutions – or the sovereign itself – to price against in future. And, of course, the government needed the money and Islamic liquidity is a very practical way to get it at an affordable level.
Upsized
The five-year issue of senior unsecured trust certificates pays 3.5%
