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Oman Fixed Income Fund registers another year of record performance

MUSCAT, 31 March 2013 – Oman Fixed Income Fund (OMFI), the largest Omani fund of over RO 100 million, announced another year of record operating and financial performance in 2012. With two distributions during 2012, the Fund made annualized distribution of 8.9 per cent on its paid-up capital in the year. During 2011, the Fund had made annualized distribution of 7.7 per cent of its paid-up capital. The objective of the Fund is to generate return above long-term fixed deposits and the Fund has been successfully achieving its objectives since inception. The Fund is the only fund in the region with a mandate to invest in subordinated/ mezzanine securities.

At the recently held meeting of the Fund Management Board, the board members approved the audited financial statements for year 2012.  Sulaiman bin Mohamed bin Hamed Al Yahyai, Chairman of the Fund’s Management Board, said “The Fund has performed well for the second year in a row. In 2012, the net profits of the Fund registered an increase of 23.2 per cent over FY 2011. Further, the Fund undertook 2 new investments recording increase of more than 100 per cent in its investment commitments at the end of 2012.”

The Bank Muscat managed Fund was launched in late 2010 and focuses on investments in subordinated debt securities of Omani Companies. The fund aims to develop the underserved subordinated debt market in Oman and has been well received by both investors and investees alike.

Sulaiman bin Mohamed bin Hamed Al Yahyai further added, “We are pleased by the Fund’s overall performance and impressive distribution track record since inception. The Fund was conceived in 2010 keeping in mind the then difficult market conditions. It offers an alternative investment option for investors and an attractive source of funding for Omani companies who have historically raised capital from traditional debt and equity. Since the launch of the Fund in 2010, the Fund has successfully achieved its objective of delivering superior returns than those offered by conventional fixed income/ savings products such as fixed deposits.”

Subordinated financing has been globally utilised as a funding source to replace equity requirements. Corporates opting for subordinated debt funding enjoy substantial savings in comparison to the higher cost of equity. This also leads to enhancement in return on equity and thus significant value creation for the shareholders of these companies without any dilution in control. Investors too benefit from higher yields than conventional fixed income/ savings products such as fixed deposits.