PHOTO
Oman will continue to tap the debt capital market (DCM) at a gradual rate in 2025 and 2026, as the Gulf state intends to lower its overall debt to around 30% of the gross domestic product (GDP), Fitch Ratings said.
Total DCM issuance stood at $10.3 billion last year, up by 61.4%, while the first quarter of the year recorded issuance worth $1.5 billion.
The ratings agency said that the DCM in the sultanate is still one of the smallest in the GCC region and continues to face some local challenges, while it is also not shielded from the ongoing global uncertainty and overall slowdown in the primary market dollar issuance.
It cited that Oman sees limited private sector offerings and mainly attracts banks rather than a wider range of investors. There is also limited trading or activity in debt denominated in the domestic currency.
“The Omani DCM is still developing… It faces issues such as limited private sector issuance, investor base concentrated with banks, shallow Omani rial market and low secondary market liquidity,” the ratings agency said.
Fitch also noted that sukuk still dominates the funding mix, accounting for 63.4% of the DCM issuance, with the rest in conventional bonds (excluding treasury bills) as of last year.
During the first three months of the year, Fitch rated around $7.2 billion of outstanding Omani sukuk at BB+. Corporates accounted for more than half (55.2%) of the sukuk, while the sovereign accounted for 44.8%.
Last year, sukuk issuance went up by 124.9% to $2.9 billion, outpacing conventional bonds, which also increased by 45.4% to $7.4 billion.
The Omani government intends to raise $1.9 billion from the local market in 2025. Financing needs for the current year are estimated at $6.3 billion, of which 53.2% will be financed through external debt, 30.5% by local borrowing and 16.3% by withdrawal from reserves, according to the Ministry of Finance.
(Writing by Cleofe Maceda; editing by Seban Scaria)
