Muscat, 20 January 2009: BankMuscat, the leading financial institution in the Sultanate of Oman, successfully closed its fourth Certificate of Deposit (CD) auction issue on 19 January. The issue was overwhelmingly subscribed to the extent of RO 24.3 million as against the issue size of RO 20 million. The weighted average yields accepted were 5.25 per cent and 5.50 per cent for one and three years respectively. BankMuscat rejected all the five year bids as they did not reflect either the present market conditions or the direction of the interest rates. BankMuscat expects interest rates to soften against the backdrop of recently announced CBO measures, softening global interest rates, softening interest rates within the GCC, weak global economic outlook putting less pressure on the money and risk aversion driving money to bank deposits.
BankMuscat accepted a total amount of RO 60.4 million of bids against the subscription of RO 107.2 million till the fourth auction. The Bank targets a total of RO 250 million from the CD issuance programme within a one-year time-frame. The primary objective of the CD auction programme initiated by BankMuscat is to facilitate the creation of a Rial Omani benchmark yield curve.
Market players have already started taking BankMuscat CD auction results as a bench mark to price their assets and liabilities. BankMuscat plans follow-on CD issues once in a month, which will ultimately lead to the development of a stable and reliable local currency benchmark.