Paving the way for Oman's first sovereign sukuk

Published May 12th, 2015 - 03:30 GMT

Oman's Ministry of Finance (MoF) announced the proposed issuance of the country's first sovereign sukuk on Sunday. 

The government sees the debut sovereign sukuk issue as a benchmark transaction that will form a key milestone in the evolution of the sukuk market in Oman, while providing an essential domestic liquidity management instrument for Omani Islamic financial institutions and an alternative to conventional financial institutions, a ministry press release said.

The Government Sukuk Committee, formed by the MoF to oversee the process of the issuance, announced that the sukuk will open for subscription in the near future.

The committee is chaired by Tahir Salim al Amry, director general of budget & contracts at MoF, and comprises a select team of professionals from the MoF, the Central Bank of Oman (CBO) and the Capital Market Authority (CMA). The committee is also being assisted by the MoF coordination team.

Elaborating on the objectives of the issuance, Amry said, “The sukuk is primarily aimed at addressing the need of the nascent but fast growing Islamic financial sector in Oman. The sukuk will serve as a domestic investment and liquidity management instrument to Islamic financial institutions in the country.

“In addition, the sukuk will support the government in fulfilling its development targets and creating a benchmark for capital market transactions in Oman in general and sukuk in particular.”

Speaking on the details, he said, “The issue would be through a private placement and marketed primarily to Islamic financial institutions and sophisticated investors with a minimum subscription of RO500,000.”

Bank Muscat Investment Banking along with the bank’s Sharia'a-compliant banking window Meethaq, and Standard Chartered Bank have been appointed to advise the government on the transaction.

“We have secured in-principle approval from the CMA and are in advance stages of the structuring and documentation of the transaction,” Amry added.

H E Abdullah al Salmi, executive president of CMA, said, “The CMA considered the plans proposed by the Ministry of Finance, and provided in-principle approval for the issuance. We are confident that this will have a positive impact on Oman’s capital market by serving as a benchmark for future sukuk issuances.”

H E Salmi added, “This issuance forms an integral part of the overall strategy of CMA to enable the capital market to play its vital role in the economic development of Oman, particularly in the fixed-income market, where sukuk forms an important element.

“The transaction will also enhance the depth and breadth of the overall capital market in Oman. In a short span of two years since the issuance of the IBRF, besides the establishment of Islamic banks and windows, the Islamic capital market has seen the launch of the new MSM Shariah Index, three Sharia’a-compliant investment funds, the first corporate sukuk, and two takaful operators,” he added.


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