On behalf of the Government of the Sultanate of Oman, represented by the Ministry of Finance, the Oman Sovereign Sukuk Company has announced the results of the auction for its 8th issue of Ijarah sukuk, amounting to OMR286 million.
In a statement, the company noted that the total subscription requests for this 8th issue exceeded three times the stated amount, reaching approximately OMR326,873,700. The average acceptable return was set at 4.75 percent, with a maximum acceptable return of 4.85 percent and a minimum of 4.6 percent. The statement confirmed that the bonds were issued on December 30, 2024.
The profit from the Ijarah sukuk will be disbursed biannually—on June 30 and December 30—over a period of seven years, culminating in the sukuk’s maturity on December 30, 2031.
Read more: Oman’s public debt sees slight decline, reaches $39.23 billion
How do Ijarah sukuk operate?
Ijarah sukuk are certificates of equal value issued by the owner of an existing asset or property, either independently or through a financial intermediary, with the intention of leasing it in exchange for rental payments from the proceeds of the subscriptions.
What are the categories of sukuk?
Sukuk can be classified into the following categories:
- Product-based: The AAOIFI, which sets standards for accounting, auditing, governance, ethics, and Shariah compliance, has identified 14 distinct types of sukuk. Common varieties include Ijara (Lease) sukuk, Murabaha (Cost-plus-profit margin sale) sukuk, Musharaka (Profit & Loss Sharing Partnership) sukuk, Mudaraba (Profit sharing & Loss bearing Partnership) sukuk, Istisna (Construction/Manufacturing Financing) sukuk, and Salam (Sale with spot payment but deferred delivery) sukuk.
- Issuer-based: Issuers such as sovereign entities, corporations, and financial institutions may raise funds through the issuance of sovereign, sub-national, or corporate sukuk, respectively.
What are the structures of sukuk?
The structuring of sukuk generally involves assembling pools of Shariah-compliant assets or projects, requiring review and approval from Shariah advisors to ensure adherence to Shariah principles. Sukuk structures are based on specific contracts for the exchange of these compliant assets, which may include sales and purchases based on immediate, installment, or deferred payments, leasing specific assets, or participating in joint-venture businesses.
Tender results of Government T-bills worth $127.5 million issued
In a related development, the total issuance of Government Treasury Bills reached OMR49.1 million this week. The value of the allotted Treasury bills was OMR3.1 million, with a maturity period of 28 days. The average accepted price was OMR99.685 per OMR100, and the minimum accepted price was also OMR99.685 per OMR100. The average discount rate and yield were recorded at 4.10625 percent and 4.11923 percent, respectively.
Additionally, OMR30 million worth of Treasury bills was allotted with a maturity of 91 days. The average accepted price was OMR98.922 per OMR100, with the minimum accepted price at OMR98.920 per OMR100. The average discount rate and yield for this issuance stood at 4.32385 percent and 4.37097 percent, respectively.
Furthermore, OMR16 million in Treasury bills was allotted for a maturity period of 182 days, with an average accepted price of OMR97.790 per OMR100 and a minimum accepted price also at OMR97.790 per OMR100. The average discount rate and yield were 4.43214 percent and 4.53231 percent, respectively.
Treasury Bills are short-term financial instruments that are highly secure and issued by the Ministry of Finance, providing licensed commercial banks with opportunities to invest their surplus funds. The Central Bank of Oman (CBO) serves as the Issue Manager, offering the added benefit of immediate liquidity through discounting and repurchase (Repo) facilities.
The interest rate for Repo operations with the CBO is set at 5.00 percent, while the discount rate for the Treasury Bills Discounting Facility is 5.50 percent.
Moreover, Treasury Bills enhance the local money market by establishing a benchmark yield curve for short-term interest rates. The Government may also utilize this instrument whenever necessary to finance its recurrent expenditures.
