* Oman close to concluding investor roadshows
* Dollar conventional bond may exceed $2 billion -investors
* May want to issue before any rating agency action
* 30-year tranche could attract very strong demand
* Sukuk issue may come soon after conventional
By Davide Barbuscia
DUBAI, Feb 27 Oman aims to conduct a large U.S.
dollar bond sale this week that could exceed $2 billion, and
also plans to issue dollar sukuk over the next few months to
plug a budget deficit caused by low oil prices, investors said.
The government intends to sell a conventional bond with
maturities of five, 10 and 30 years, according to lead banks,
probably after roadshows end in the United States on Tuesday.
Oman has also mandated banks for a dollar sukuk, which could
come soon after the conventional issue, said the investors, who
obtained their information from roadshows conducted by Omani
officials in the United Arab Emirates on Sunday.
Telephone calls and an email to Oman's finance ministry
seeking comment were not answered.
Given Oman's substantial funding needs – the government said
in January it planned to borrow 2.1 billion rials ($5.45
billion) internationally this year – the conventional bond could
be sized at $2.5 billion or even larger, the investors said.
Oman may want to move quickly with a big issue before any
possible downgrade of its credit rating or outlook, some
investors suggested. Standard & Poor's rates Oman BBB-minus, one
notch above junk grade, with a negative outlook, and Moody's has
a Baa1 rating with a stable outlook.
The 30-year tranche would be a first for Oman and could
attract demand from non-Gulf investors who showed strong
appetite for high-yielding, long-term Middle Eastern assets when
they bought 30-year notes offered by Saudi Arabia last October
and Egypt in January.
"By issuing a 30-year tranche, they’re clearly looking to
tap international accounts with natural appetite for longer
duration exposure," said Doug Bitcon, head of fixed income funds
and portfolios at Dubai’s Rasmala Investment Bank.
The new five-year bond is likely to be priced at around 200
basis points over mid-swaps, factoring in a new issue premium of
about 25 bps to Oman's 2021 bond, which traded around 175 bps
over mid-swaps on Monday. The 10-year tranche could go up to
300-310 bps over mid-swaps, investors said.
Oman issued bonds due in 2021 and 2026 last June
then tapped them in September.
The 30-year tranche could be priced between 370 and 390 bps
over mid-swaps, offering a yield between 6.5 percent and 7
percent, investors said.
A 390 bps spread would be very attractive against
Indonesia's 30-year bond issued in December and
trading around 228 bps, or even Turkey's 2045 bond,
currently seen at about 364 bps, one portfolio manager said.
One potential scenario could see Oman making big issues of
10- and 30-year notes while limiting the size of the five-year
tranche. It could then count on unsatisfied demand for
short-dated Omani paper when it issues its sukuk, which are
likely to have maturities of five and seven years, said the
(Editing by Andrew Torchia and Catherine Evans)