Omantel plans $130 million sukuk issue by early 2016

 09 Nov 2015 - 13:27

Omantel plans $130 million sukuk issue by early 2016

 

By Fatma Alarimi

Muscat: Oman Telecommunications Co (Omantel) plans to sell 50 million rials ($130 million) of Islamic bonds by early 2016 in what would be the  country's second corporate sukuk issue, a top executive said on Monday.

Funds raised will be used to build a new headquarters for the majority state-owned firm, which is Oman's largest telecommunications operator, chief executive Talal al-Mamari told Reuters.

"We are in the final stages of getting all approvals and we expect to issue the sukuk by the end of this year, or at a maximum by early next year," Mamari said.

The five-year sukuk may be offered to small investors with a minimum subscription of 10,000 rials, although a final decision has not been made, he added.

Oman began developing an Islamic finance industry later than its neighbours and has only seen one previous corporate sukuk sale, a 50 million rial issue by real estate developer Tilal Development Co in 2013.

But last month the government sold its first sovereign sukuk, a 250 million rial, five-year issue, and this may make corporate sales easier.

Until the sovereign issue, "we lacked a yield curve and a benchmark for sukuk in the market. And (now) we do, so we expect more sukuk to be issued," said Abdullah al-Salmi, executive president of the Capital Market Authority.

Encouraging corporate sukuk offers could help to wean Omani companies off their heavy dependence on bank lending, reducing risks in the banking system, which is buying an increasing amount of government debt as the state finances a budget deficit caused by low oil prices.

Reuters