Muscat: BankMuscat, the leading financial institution in the Sultanate of Oman, targets to raise RO 20 million in the fourth round of Certificates of Deposit (CDs) auction on 18 January 2009. The CDs will be issued on 21 January in three categories, each with a maturity of 12, 36 and 60 months bearing a coupon of 5 per cent, 5.5 per cent and 6 per cent respectively. The minimum subscription will be for RO 100,000 and thereafter in multiples of RO 100,000. The interest is payable on semi annual basis and the CDs are transferable among eligible investors in lots of 1 (RO 100,000) or in whole numbers. They will be redeemed at par value together with accrued interest on the maturity date. Eligible investors include Omani and non-Omani individuals, corporate bodies and institutions established in Oman and otherwise. Similar to the previous issues, CD applicants may submit up to five bids for different interest rates. The bank targets to issue RO 250 million of CDs in the first year, of which RO 50 million was raised in the previous three issues.

The overwhelming support evoked in the previous rounds of the CD auction indicates the strong appetite among financial institutions to absorb high-yielding BankMuscat products. Liquidity situation has improved noticeably since then, both in local markets as well as international markets. This is partly reflected in the recent CBO CD auction - where the Central Bank received bids for an amount of RO 469 million. In line with easing liquidity conditions, BankMuscat has reduced the coupon on CDs by 0.35 per cent and 0.15 per cent in the 12 month and 36 months tenor when compared with the previous issue while the coupon for 60 months tenor is unchanged. However, it may be noted that the coupon on the instrument need not reflect the total yield to investors who can choose to bid for these CDs at a value lower or higher than the face value. Considering that the Bank will follow the auction process in which the CDs will be issued on the basis of ascending order of interest rates beginning with the lowest yield – the current issue is likely to receive bids at lower yields in line with the improved local market liquidity. If there are more bids at the last accepted yield than is available to be allotted, then the allotment for such applicants will be made on a pro rata basis. The bank reserves the right to accept or reject any or all the bids if the yield is not reflective of the market conditions or for any other reason without disclosing the same.