Bloomberg/Christopher Pike


Oman cuts borrowing plans as it turns to asset sales

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Oman is working with legal advisers to update its bond programme and will tap the market before early May.

Thursday 21, February 2019

(Bloomberg) --Oman plans to slash its borrowing requirements for 2019 by as much as 70 per cent and rely on asset sales to plug one of the largest budget deficits among oil exporters.

The Gulf Arab monarchy will likely raise between $2 billion and $3 billion in bonds and loans, the official said on condition of anonymity because the plans have not been made public. The budget had listed debt requirements of about $6.2 billion.

The country plans to plug its funding gap using dividends and capital gains received from Oman Oil Company’s stake sale of the Khazzan field. An additional $1 billion will come from the ownership transfer of some gas pipelines to Oman Gas Company.

The plan is expected bolster Oman’s bonds that have tumbled as the country grapples with volatile oil prices. The yield on dollar-denominated securities due in 2028 has risen about 100 basis points since the end of September.

Oman, with an expected budget deficit of nine per cent of gross domestic product this year, has been slow to implement reforms following the crash in oil prices in 2014. Since then, its debt as a share of economic output has risen 10-fold to 50 per cent. Fitch Ratings downgraded the country’s debt to junk in December, fueling a sell-off in the nation’s bonds.

Moody’s Investors Service is the only rating company that has Oman at investment grade, though it’s just one level above junk.

The government official said some of the needed borrowing will come from tapping a $1.2 billion loan backed by the World Bank’s Multilateral Investment Guarantee Agency. Any additional funding will come through domestic borrowing, the official said


TAGS : bonds , loans, Oman Oil Company, Multilateral Investment Guarantee Agency, Fitch Ratings

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