DUBAI (Reuters) – Oman began selling US dollar-denominated multi-tranche bonds on Thursday, a document showed, as the indebted Gulf oil producer sought new funding to cover a large budget deficit.
Oman is selling bonds with maturities of 10 and 30 years and has reopened $ 750 million in bonds due 2025, according to a document released by one of the banks leading the operation and seen by Reuters.
Oman, rated below the investment grade by all major rating agencies, has accumulated debt at breakneck speed in recent years to offset falling oil prices and cover growing deficits.
On Thursday, it started trading the 10-year paper at around 6.625% and the 30-year at 7.625% -7.75%, while the reopening, or “tap,” of the 2025 bonds traded at around 4.875%.
The bonds will be benchmark size, which typically means more than $ 500 million per tranche.
Oman is expected to raise $ 2-3 billion from the sale of the debt, a source familiar with the matter said. The finance ministry did not immediately respond to a request for comment.
Citi, HSBC, JPMorgan and Standard Chartered have been mandated to coordinate the deal, which will be concluded later Thursday, the document said.
Oman is also raising funds in the banking market, sources told Reuters earlier this week, working with a group of banks to raise a $ 1.1 billion facility that could go up to $ 2 billion depending market appetite.
Oman’s external debt maturing this year and next stands at $ 10.7 billion, or about 7.5% of gross domestic product, S&P Global Ratings said.
It expects a 2021 budget deficit of 2.24 billion rials ($ 5.83 billion) this year and to make up for the deficit the government aims to raise around 1.6 billion through borrowing and draw 600 million from its reserves.
Reporting by Davide Barbuscia; Editing by Alison Williams and Mark Potter