HSBC Bank can raise Oman’s exposure further in international markets

Business Saturday 02/July/2016 18:17 PM
By: Times News Service
HSBC Bank can raise Oman’s exposure further in international markets

Muscat: HSBC Bank Oman is technically capable of bringing complicated well priced transaction to the local market and getting lots of investor appetite, says the CEO while describing the role as International Financial Advisor for Petroleum Development Oman (PDO) to raise $4 billion from a group of international financial institutions.
“We have the international connectivity and expertise for a complex financial deal, which none of the local bank has,” Andrew Long, CEO of HSBC Bank Oman told the Times of Oman in an interview.
“We are delighted that the full resources of the HSBC Group have been brought to bear in bringing PDO to the market for the first time. This reflects our ability to assist the Sultanate of Oman in raising further its exposure in the international markets,” he added.
“Having been present in the Sultanate for around 68 years, we have been able to link our local market knowledge and our strong relationship with PDO with the broad technical capabilities that HSBC Group has in financing and advising the oil and gas sector,” he further said.
HSBC group’s staffs from London and Dubai, who are experts in this sort of transactions, together drafted the transaction documents.
Speaking about the difficulties the HSBC Bank Oman faced as an International Financial Advisor when they went into international lenders, the CEO said, “the current oil price was the biggest single difficult because nobody know where it is going.”
“That’s where the technical expertise from the bank side and of the PDO and Ministry of Oil and Gas teamed together to structure the issue,” he added.
According to him, the responses from the international lenders were remarkable and around 30 banks were interested in the deal.
“The structure of PDO’s transaction attracted a lot of institutions in the international market because the way it’s priced, structured, documentation was a unique one,” Long asserted.
According to him, this is the third oil related deal in Oman in which HSBC Bank Oman acted as an International Financial Advisor, the other two were private sector transactions.
“These deals show our local relationships and international expertise,” CEO said.
HSBC Bank Oman brought this idea to PDO 12 to 18 months ago when they saw the oil price beginning to fall, according to Long.
"We anticipated that there is a requirement for finance for PDO and additional requirement for Ministry of Finance and other sources, and we suggested to them that increasing debt would be a potentially good solution," Long said.
PDO chose the HSBC Bank Oman as their International Financial Advisor to raise the fund because of two reasons, according to Andrew Long.
“We bring two benefits to them; one main thing is PDO knows us locally very well, they know we are committed to the Sultanate and we are the only local bank that can bring international institutions and the other is we have our own people in the International technical side,” he said.
“So they knew that we can bring international investors and we can structure a good transaction deal for them, which made us their International Financial Advisor to raise the fund for them,” he added.
According to the CEO, the role of International Financial Advisor is a tough one.
“We had to involve in those sort of transaction in the past, to understand the legal aspect of it, the oil related production controls, the marketing aspect of it, the international appetite, and last to have the contacts," the CEO said when he explained the role of an International Financial Advisor.
“We can’t do it in a single day; it’s a hard process,” he asserted.
Speaking about the how the fund will benefit PDO the Long said, “In an environment of continued low global oil prices, the financing will be used to support the company’s activities which include the construction of major new oil and gas facilities providing long-term economic benefits for the Sultanate.”