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| Source: Alizz Islamic Bank. Al Busaidi. |
Ghalib Al Busaidi, DGM & Head of Wholesale Banking commented, "Our selection as Joint Lead Manager for the inaugural issue of seven-year USD sukuk is hugely significant and prestigious for Alizz Islamic Bank. The trust that has been placed in us by the government of Oman to deliver on a global stage is truly appreciated and the issue itself was a huge success despite the challenges associated with the recent credit downgrade by S&P which appears to have been brushed aside by the global investor community.
"It is clear that global investor confidence in the prospects for the Oman economy is high and this is evident in the significant oversubscription which resulted in a sizeable tightening in the spread against swaps (as a benchmark) from initial pricing thoughts (IPT)."
The sukuk, structured based on ijarah (lease), carries a rental rate of 4.397% and maturity in May 2024. It was eventually oversubscribed over three times with institutional investors from Asia, the Middle East, Europe and US taking up the offer. The eventual size of the issue was US$2 billion as planned at the outset, which resulted in investors receiving a lower allocation than they required.
Al Busaidi elaborated, "Having seen the huge success of the conventional bond issue earlier in the year where the government of Oman issued the five-year, 10-year and 30-year maturities which were four times oversubscribed, we were hopeful that the seven-year sukuk would be well received globally, and it certainly was. Unsurprisingly, the MENA region was the dominant category of investors with European investors also showing very healthy demand. The sukuk was not only confined to Islamic investors, with conventional accounts also constituting significant demand for the issue."
"This deal heralds a new age for the Sultanate of Oman with the first publicly-placed sovereign international sukuk issuance," said Naveed Ali, Executive VP & Chief of Corporate Banking, Dubai Islamic Bank (DIB). "DIB has been a major player in the Islamic debt capital markets space since the inception of the sukuk product and has participated in most landmark Islamic bonds. The tremendous interest generated from across the globe by the Oman sovereign sukuk illustrated an excellent and balanced distribution emanating from the Middle East, US, Europe and Asia, clearly indicating a substantial demand for quality credits from across the globe. This is underpinned by the fact that the issuance was over-subscribed by nearly three times which allowed for the tightening of IPTs by 35 basis points (bps), thus demonstrating that the appetite for GCC sovereign credits remains strong even in these challenging times. I congratulate the Sultanate of Oman on this key successful milestone deal."
Al Busaidi further explained, "Most importantly however was the eventual pricing which was the biggest success at 235 bps over swaps (as a benchmark) resulting in a rental rate of 4.397%. I think this should give confidence to other government-related entities (GREs) and corporates considering their US dollar funding options as sukuk are a viable tool to raise funding."
Al Busaidi further explained, "Most importantly however was the eventual pricing which was the biggest success at 235 bps over swaps (as a benchmark) resulting in a rental rate of 4.397%. I think this should give confidence to other government-related entities (GREs) and corporates considering their US dollar funding options as sukuk are a viable tool to raise funding."
Alizz Islamic Bank supports state entities and corporates wanting to tap the capital markets both locally in Omani rials as well as globally in US dollars through various shari'ah-compliant structures including sukuk and funds.