#Oman to meet half of state borrowing needs through sukuk - Moody's | ZAWYA MENA Edition

Oman to meet half of state borrowing needs through sukuk - Moody's | ZAWYA MENA Edition

Moody’s Investors Service said the rising share of Islamic assets in Oman’s banking assets will continue to deepen the market for domestic government sukuk, supporting government liquidity.

“We expect the government will meet $2.0 billion-$2.5 billion of its annual borrowing needs with sukuk issuance, around half of which will likely be in the domestic market, supported by the growing share of Islamic banking assets,” it said in a note.

Domestic Islamic banking assets in Oman continue to grow at a significantly faster pace than conventional assets, government data showed.

Oman financed a modest 2.6 percent of its fiscal deficit through net sukuk issuance in 2020, down significantly from around 14 percent in 2019, 24 percent in 2018 and 20 percent in 2017.

“The declining share of sukuk in the funding mix reflects a general absence of international sukuk issuance, in part driven by investors’ preference for conventional bonds amid tighter global liquidity conditions, and the increase in Oman's sovereign market risk premia following the sharp decline in oil prices during 2020,” Moody’s said.