Capital Market Authority of Oman approves sultanate’s first Sukuk - IFN

Capital Market Authority of Oman approves sultanate’s first Sukuk

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OMAN: After months of protracted talks and deliberations, the Capital Market Authority (CMA) of Oman has approved the country’s first corporate Sukuk to be issued by Tilal Development Company. The five-year OMR50 million (US$130 million) deal will be privately placed and is expected to close by August, according to sources close to the deal. In May this year, the Sukuk’s arrangers, Al Madina Financial and Investment Services, had submitted its proposal for the issuance to the CMA; opting for a private placement due to the less stringent regulatory requirements. Mohsin Shaik Sehu Mohamed, head of Islamic finance at Al Madina Investment, said: “We have already done our roadshows and also got some commitments from pension funds locally. Now the target is to close this deal. We are trying our best to close it in July.” The Tilal Sukuk is expected to do well despite the lack of exposure of the Omani market to Islamic financial instruments, mainly due to its specific client base according to its arrangers. “What we see is that it will be a private placement and most are Shariah-sensitive investors,” said Mohsin. The paper, which received a provisional rating of ‘omBBB+’ with a stable outlook by Capital Intelligence in April, will be structured as a Sukuk Ijarah, holding a 5% profit rate. Proceeds from the issuance will be used to repay the issuer’s existing debt and to fund the expansion of the Muscat Grand Mall. Tilal, which is 40% owned by the Qatari Investment Authority, a sovereign wealth fund, has been said to attract domestic investors, insurance companies and pension funds for its upcoming issuance.