Moody’s assigns Baa1 rating to Oman’s Sovereign Sukuk

Dubai—Moody’s Investors Service has today assigned a rating of Baa1 to the US dollar certificates issued by Oman Sovereign Sukuk S.A.O.C, a special purpose vehicle incorporated in Oman and wholly owned by the Government of Oman. The payment obligations associated with these Certificates will be direct obligations of the Government of Oman.
On 29 June 2016, the Government of Oman via Oman Sovereign Sukuk S.A.O.C priced $500 million of trust certificates with a profit rate of 3.5 per cent per annum, payable semi-annually. The Certificates are based on an al-Ijarah structure and issued under a private placement. The tenor is six years with maturity date of 14 July 2022. Principal will be repaid via three equal repayments at the end of the 48th month, 60th month and 72nd month from the issue date (14 July 2016).
The Baa1 rating assigned to the Certificates is at the same level as the long-term issuer ratings of the Government of Oman, as the Sukuk certificate holders will (i) effectively be exposed to Oman’s senior credit risk; (ii) not be exposed to the risk of performance of the Portfolio Assets relating to the Certificates; (iii) will not have any preferential claim or recourse over the Assets, or rights to cause any sale or disposition of the Assets except as expressly provided under the Transaction Documents; and (iv) only have rights against the Government of Oman, ranking pari passu with other senior unsecured obligations as provided in the Transaction Documents.
Moody’s notes that its Sukuk rating does not express an opinion on the structure’s compliance with Shari’ah law. Oman’s Baa1 long-term issuer ratings with stable outlook are supported by high levels of wealth, fiscal space offered by relatively low levels of general government debt and still sizable government financial assets, and comparatively low risk that contingent liabilities from the banking system or wider non-financial public sector will crystallize on the government’s balance sheet as growth slows.—Agencies

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