MUSCAT – BankMuscat, which has always been at the forefront of financial innovation in Oman, is launching today (8 April) a subordinated bond issue carrying 8 per cent annual yield. The bond issue targeting to raise RO 60 million will be open for subscription for a month till 7 May.
The face value of the bond is RO 1.000 each with the issue price pegged at RO 1.010, including 10 baisa towards issue expenses. Investors can apply for a minimum of 100 bonds and in multiples of 100 thereafter.
The bond will have a maturity of seven years from the allotment date with returns of 8 per cent per annum. The interest will be payable semi-annually in arrears.
Speaking at the launch of the bond, K. Gopakumar, General Manager, Wholesale Banking said “Bank Muscat has introduced many innovative financial products in Oman and has a series of firsts to its credit, including the first subordinated bond issue in the year 2000, 10-year bond issue in Oman, the first convertible bond issuance, the first Global Depositary Receipt etc. Last year in August, the Bank announced its Certificates of Deposit programme. The objective of this initiative is to develop a long-term yield curve for Rial Omani. At the moment while we have a long-term yield curve for US Dollar, there is no reliable benchmark available for Rial Omani. The programme has been successful, raising RO 86 million in the first six CD issues. The 8% Bond is an extension of that initiative, aimed at creating greater visibility on the long end of the Rial Omani yield curve. The subordinated bonds would be considered as tier 2 capital of the bank and therefore strengthen the capital adequacy of the Bank.”
The Bank will apply for the bonds to be listed on Muscat Securities Market (MSM). The listing of the bond on MSM is aimed at facilitating easy liquidity for investors.. Abdullalh Al Hinai, Assistant General Manager, Investment Banking added “The 8% bond further attests BankMuscat’s commitment to develop the bond market in Oman as well as expand the bouquet of investment choices available to retail investors. In more advanced markets, bond markets are much larger than equity markets. The minimum investment for the bond is RO 100 which would suit the retail investor. As retail investors have responded in large numbers to recent IPOs, the Bank anticipates large subscription to the Bond issue in view of the opportunity to earn stable returns.”
The Bank targets to raise RO 60 million through the issuance and also retains a green shoe of another RO 15 million, in case of oversubscription. Allotment is scheduled within 15 days of the closing date of the issue. BankMuscat has been rated A- and A2 by leading international rating agencies Moody’s and Fitch which confirms the high credit quality of the Bank.
The subscription forms are available at all BankMuscat branches and branches of Bank Dhofar, National Bank of Oman and Oman Arab Bank, which have been appointed as collecting banks. Investors can refer to the prospectus for risk factors and mitigants and visit www.bankmuscat.com for more details of the issue.