The Development Bonds are
financial instruments issued by the Government of the Sultanate of Oman,
to provide an investment outlet for the surplus resources available in
the economy and also to finance capital expenditure of various
development projects envisaged in the Five Year Development Plans. The
Central Bank of Oman issues the Bonds on behalf of the Government of the
Sultanate, under the following terms and conditions.
The Bonds will
be direct and unconditional obligations of the Government of the
Sultanate of Oman.
2.Date of Issue
3.Size of the
The size of the issue is fixed at RO 80 million.
The Bonds are being offered in the denomination of RO 100/- and
The Bonds will be repaid after the expiry of 4 years from the date of
The Bonds will offer 4.75% coupon rate per annum.
Interest shall be effective from the date of issue, and will be paid
each February 1st, and August 1st of every year (semiannually)
until maturity. The interest payment will cease once the Bond matures.
Interest will be calculated on a 365 days a year basis. Interest will be
credited to the holder’s respective accounts maintained with commercial
banks. All applicants must indicate their bankers in their application
forms for this purpose.
Submission of Application
Applications for the bonds will be received by licensed banks in the
period July 8 to July 24, during their working hours.
Action will be held at the premises of the central Bank of Oman, Head
Office at 9:00 am on July 27, 2002. The cut off time for submission of
applications is 9:00 am on the auction day.
9. Method of
The Bonds will be issued by the auction method.
There will be both a competitive, multiple yield, and non-competitive
type of auction.
Competitive Bids: Bidders will bid for bonds on a yield basis. The
minimum bid accepted for the competitive auction will be RO 10,000 and
in multiples of RO 100. The maximum bid will be equivalent to 33% of the
total amount offered (i.e. RO 26,400,000). Bidders will state their
desired yield in comparison to the offered coupon of 4.75%. For example,
they can bid for a yield of 4.70% or 4.76% etc., up to two decimal
places. Competitive bids will be accepted in ascending order of yield,
until the full amount of the issue is allotted.
Non-competitive bids: a
non-competitive portion, not to exceed 25% of the total amount offered,
will be set aside and awarded to bidders at the average yield of the
competitive portion allotted. The minimum bid accepted for the
non-competitive auction will be Ro 100, and in multiples of RO 100. The
maximum accepted bid will be RO 50,000. If the non-competitive portion
is oversubscribed, bids will be prorated.
to be covered: Those investors who submit competitive bids must cover
and authorise their banks (Agents) to block the full purchase price of
their bids. Those investors who wish to participate in the
non-competitive auction may be required by their bankers (Agents) to
cover for more than the par value, as the average purchase price of
bonds is only known/determined after closure of the competitive auction.
Therefore, investors in the non-competitive auction are likely to either
pay a premium or get a discount on the par value applied for, depending
on the outcome of the competitive auction
Each bid shall state the yield to maturity to two decimal places. The
purchase price for each accepted competitive bid will be determined on
the basis of the semi-annual return derived from the coupon rate on the
bond, carried to three decimal places and rounded to the nearest five
Baiza. The purchase price for non-competitive tenders will be calculated
on the basis of average price per RO 100, rounded to the nearest five
12. Number of
For the competitive portion, tenders may consist of one or more bids, up
to a maximum number of five bids. For the non-competitive portion,
tenders must be made in a single bid for the desired amount. Bidders may
submit applications for both auctions, if they desire.
13. Rejection of
The Ministry of Finance and the Central Bank reserve the right to accept
or reject any or all tenders, in whole or in part, without providing any
14. Form of
A Bond Advice will be issued in respect of each holder in the name of
the individual person(s) or institutions. The details of the Bonds
allotted will be recorded in the Register maintained by the Central Bank
The Bonds will be redeemed at par on maturity. The Bonds are not subject
to optional redemption prior to maturity (i.e. August 1, 2006). However,
it would be possible to sell and trade Bonds in the secondary market in
accordance with the laid down procedures.
Applications will be accepted by the Central Bank of Oman (CBO) from the
Banks. Institutions and individuals must apply for the Bonds through
17. Methods of
Banks should authorise the CBO to debit their clearing account for the
amount of Bonds allotted to them and their customer.
of Auction Results
Auction results will be announced the morning after the auction date.
Information to be released includes the following: aggregate value of
total bids; value of non-competitive bids; amount allotted; average
accepted yield and price; high and low bid yields and price; allotment
ratio at high accepted yield.
On allotment of Bonds, the
Bond advice will be issued to the investors through their respective
selling Banks. The institutions which applied to the CBO directly, will
receive their Bond advices from the CBO.
In the case of join applications of two or more parties, the names of
all claimants get incorporated in the Bond Register maintained by the
CBO. For lack of space, only the name of the first party will be printed
on the Bond advice.
The trading of
bonds can take place at the floors of the MSM and or at the counters of
the appointed banks
namely: (Oman Int. Bank, National Bank of Oman, Oman Arab Bank, Bank
Dhofar Al Omani Al Fransi and Bank Muscat). Prices of Bonds in the
secondary market will be determined by the prevailing market forces.
Accrued interest up to the point of sale will be paid to the seller
21. Payment of
the par value of the Bonds allotted will be credited to the holders’
respective accounts maintained with their nominated banks.
22. Transfer of
advices will be issued for the consolidated amount allotted. The Bond
holders are permitted to trade their Bonds in full or in parts (RO 100/-
and in multiples thereof) through Agents of the Muscat Securities Market
(MSM). A sale or transfer will be effected by means of an instrument of
transfer as per the procedures followed in the MSM.
investors will be eligible to invest in this Issue of Government
Individuals (national or
All banks and financial
institutions located in the Sultanate.
All other Omani and
resident institutions and companies.
Back to Development Bonds