Oman’s Bank Muscat raised RO100mn (=US$259million) of Tier II capital through a private placement of fixed income subordinated paper with tenors of 61 to 84 months.
The issue attracted considerable interest from institutional investors. Bank Muscat Investment Banking was the sole placement manager for the transaction.
The Tier II issue comes on the back of an upgrade in Bank Muscat’s long-term rating by Standard & Poor’s, the leading global credit rating agency, from BBB+ to A- with a stable outlook. The stable outlook reflects S&P’s expectation that Bank Muscat will remain the dominant player in Oman and experience no significant change to its business and financial profile over the next two years. The increase in rating constitutes an affirmation, by S&P, of Bank Muscat’s strong business position, strong capital
and earnings, moderate risk position, average funding, and adequate liquidity.
Abdulrazak Ali Issa, chief executive, said, “Bank Muscat is committed to lending its full support to the socio-economic development in Oman and this capital raising will strengthen the Bank’s ability to extend finance to further enhance Oman’s development domestically and increase its competitiveness internationally.”
According to Muscat Daily, Bank Muscat raised a total of US$430mn in Tier II capital of which US$170mn was from the IFC Capitalization Fund, a global equity and subordinated debt fund founded by International Finance Corporation (IFC), a member of the World Bank group, and the Japan Bank for International Cooperation. It aims to strengthen banks that are considered vital to the financial system of emerging market countries.