Oman completes bigger-than-expected bond issue

International investors again demonstrated their desire for Gulf sovereign debt by buying $5 billion of Omani bonds.

Investors reportedly bought twice as many of the bonds, which were sold in five, ten and 30-year tranches, as expected.

The transaction means Oman has raised the majority of its expected budget shortfall this year, which it recently predicted will be the equivalent of $7.8 billion.

Investor appetite for the bonds came despite a lukewarm assessment of Oman by ratings agency Moody’s, which last month said the country’s “competitiveness remains under pressure”. The agency assigned the proposed bond issuance a Baa1 rating, which is at the lower end of the investment-grade category, three notches above non-investment grade, or “junk”, status.

The successful bond issue is reminiscent of Saudi Arabia’s blockbuster issuance of $17.5 billion of sovereign bonds last year, the largest emerging-market bond issue to date, which also beat expectations.

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