DUBAI, Sept 22 (Reuters) - Oman plans to issue U.S. dollar-denominated bonds soon, targeting $3 billion to $4 billion with the deal, two sources said, as the Gulf state seeks to bolster finances badly hit by a slump in oil prices.
The deal would cover a $2 billion bridge loan Oman secured last month and give it additional funding in what would be Oman’s first foray in the international bond market this year.
A relatively small crude producer burdened by high levels of debt, Oman - rated “junk” by all major rating agencies - said this month it was planning to tap local and international debt markets, without disclosing how much it plans to raise from overseas investors.
The bonds will be arranged by some of the banks that provided the $2 billion bridge loan, said the two sources familiar with the matter, speaking on condition of anonymity.
“It’s a September deal,” said one of them.
The bridge financing was provided by banks including First Abu Dhabi Bank, HSBC and Standard Chartered, Refinitiv’s fixed income news provider LPC has previously reported.
Oman’s ministry of finance did not immediately respond to a request for comment.
The issue would come amid a flurry of debt sales, as Gulf companies and governments take advantage of low global rates to cushion the coronavirus downturn.
Oman said in January it planned to raise about $5 billion in foreign and domestic borrowing to cover most of this year’s deficit, but that was before the pandemic and the slump in oil prices added strain to its coffers.
Since then, ratings agency Fitch has downgraded the sovereign twice, while the International Monetary Fund has estimated its fiscal deficit could more than double to 16.9% of gross domestic product this year from a 7% deficit last year.
“The coming three years will be a critical test of the funding flexibility that Oman has displayed in the past,” Fitch said last month. (Reporting by Davide Barbuscia and Saeed Azhar)
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