Sources: The Sultanate of Oman is seeking to borrow up to two billion dollars, mostly from regional banks

Sources told Reuters that the Sultanate of Oman is looking to raise about two billion dollars from a loan arranged by mostly local and regional banks, in light of international banks being cautious due to the deterioration of their creditworthiness.

Oman began talks with banks on a new loan of at least $ 1 billion in November, sources told Reuters at the time, ahead of major debt maturities.

Two sources familiar with the matter said that it is currently working on a $ 1.1 billion facility with a group of banks, which could increase to $ 2 billion, depending on market appetite.

HSBC, Mashreq Bank, Gulf International Bank, Bank Muscat and Bank Dhofar lead the operation, the sources said.

The loan is currently being marketed among a wider group of banks, and will have a maturity of 15 months with the possibility of an additional 12 months extension if the borrower decides.

HSBC declined to comment. Neither other banks nor Oman’s Ministry of Finance responded to requests for comment.

The sources said that HSBC’s presence alone indicates the amount of caution that international banks are looking for regarding their exposure to the Sultanate of Oman due to the decline in its credit curve over the past few years, as low oil prices have hit the state’s public finances.

But the Sultanate, rated below the investment grade of all major credit rating agencies, has a good opportunity for smaller regional banks due to the increased borrowing costs.

“The lending scene in Oman is changing in its entirety,” said one of the sources, explaining that part of the new loan will be used to refinance a billion-dollar debt facility due in January.

According to Standard & Poor’s Ratings, the total Omani foreign debt due this year and next year is $ 10.7 billion, which is approximately 7.5 percent of the GDP.

The Sultanate expects a deficit of 2.24 billion riyals (5.82 billion dollars) in the 2021 budget. The government aims to borrow about 1.6 billion and withdraw 600 million of its reserves to finance the deficit.

(Dollar = 0.3847 Omani rials)

Source: Reuters

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