Al Busaidy Mansoor Jamal & Co.

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AMJ advises on Oman’s debut sovereign sukuk

Filed under AMJ Deals, Capital Markets, Sukuk

Oman's sovereign sukuk

AMJ acted as Oman Counsel to Bank Muscat as issue manager and joint lead manager with Standard Chartered Bank on the first-ever sukuk offering by the Omani Government. The OMR200 million (US$517.17 million), 5-year benchmark sovereign sukuk issuance was oversubscribed close to 1.7 times, attracting 22 orders totalling OMR336 million (US$869.75 million) from a wide base of both conventional and Islamic institutions during the subscription period, which ran from Oct. 8 to 22.

The Ministry of Finance expanded the program by 25% to OMR250 million (US$647.13 million) at a yearly 3.5% cut-off yield to accommodate the strong order book. Results of the sale and allocations are awaited.

AMJ’s role included advising Bank Muscat and Standard Chartered on the listing, regulatory and settlement mechanics of the sukuk issue under Omani law as well as on Omani law aspects of the transaction structuring and documentation. Since this was a debut sovereign issue and as the draft sukuk regulations circulated by the Capital Market Authority are not yet in final form the transaction raised a number of novel issues, both substantive and procedural. The issuance also set the record for being the first debt capital market instrument – Islamic and conventional – to be priced through a book-building process with a uniform price auction.

Commenting on the deal, AMJ managing partner, Mansoor Malik, said: “We are pleased to have been involved on this ground-breaking, sukuk issuance which involved a number ‘firsts’ and a steep learning curve for all stakeholders. As such, it establishes a useful benchmark and precedent which we expect to spur future issuances, both by government and private sector.”

The issuance which is rated A1 by Moody’s Investors Service, in line with the Sultanate’s long-term issue rating, is seen as a key development for Oman’s capital markets, broadening Shari’a compliant investment avenues for private and public players, allowing them to diversify their financing base and spread risk.

Mansoor Malik led AMJ’s team which included corporate and capital markets partner, Ardeshir Patel, and senior Islamic Finance associate Asad Qayyum. Allen and Overy acted as international Counsel on the transaction.