Oman to turn to overseas market for $5b-$10b loan: Central bank chief

Muscat: Oman’s government is turning to alternative funding sources such as procuring a $5 billion to $10 billion loan from the international market, said Hamoud Sangour Al Zadjali, executive president of the Central Bank of Oman, in an interview with Oxford Business Group (OBG). The additional fund is to avoid draining liquidity from the local banking system.
The Sultanate last week raised $2.5 billion from its first international bond sale in almost two decades as it seeks to plug a budget deficit caused by crude’s decline. The Sultanate sold $1 billion of five-year notes at a yield of 245 basis points over the benchmark midswap rate and $1.5 billion of 10-year bonds at a spread of 320 basis points, according to a person familiar with the matter.
Al Zadjali told OBG that falling state deposits amid the downturn in oil prices has led to a moderate liquidity squeeze in the banking sector. The central bank chief was talking to OBG as part of the group’s research for The Report: Oman 2017, the firm’s forthcoming report on the Sultanate.
The central bank’s drive to closely monitor and increase the flow of liquidity is explored by Al Zadjali in a wide-ranging interview with Oxford Business Group.
Al Zadjali said that the CBO emphasiseson the importance of banks playing a larger role in project financing. “Due to the limited impact that local banks have on project financing, funding for large projects is expected to come from overseas through international banks or initial public offerings,” he said.
In the interview, the central bank chief also discussedon the Sultanate’s commitment to maintaining the fixed peg with the dollar, despite speculation that it could be dropped.
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