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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.

1.Security
The Bonds will be direct and unconditional obligations of the Government of the Sultanate of Oman.

2.Date of Issue
August 1st, 2002

3.Size of the Issue
The size of the issue is fixed at RO 80 million.

4.Denomination
The Bonds are being offered in the denomination of RO 100/- and multiples thereof.

5.Term
The Bonds will be repaid after the expiry of 4 years from the date of issue.

6.Coupon Rate
The Bonds will offer 4.75% coupon rate per annum.

7.Payment of Interest
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.

8.Duration of the offer
a. 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.
b. Auction day
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 Issuance
The Bonds will be issued by the auction method.

10.Type of Auction
There will be both a competitive, multiple yield, and non-competitive type of auction.

a) 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.

b) 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.

c)Amount 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

11.Issue Price
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 Baiza.

12. Number of Bids
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 Bids
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 reason thereof.

14. Form of Issue
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 of Oman.

15. Redemption
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.

16. Submission of Application
Applications will be accepted by the Central Bank of Oman (CBO) from the Banks. Institutions and individuals must apply for the Bonds through their Banks.

17. Methods of Payment
Banks should authorise the CBO to debit their clearing account for the amount of Bonds allotted to them and their customer.

18. Announcement 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.

19. Allotment Bonds
a) 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.

b) 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.

20. Secondary Market
The trading of bonds can take place at the floors of the MSM and or at the counters of the appointed banks (OTC Agents) 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 (holder).

21. Payment of Redemption Value
On maturity, the par value of the Bonds allotted will be credited to the holders’ respective accounts maintained with their nominated banks.

22. Transfer of Bonds
The Bond 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.

23. Eligible Investors
The following investors will be eligible to invest in this Issue of Government Development Bonds:

a) Individuals (national or other residents)
b) All banks and financial institutions located in the Sultanate.
c) All other Omani and resident institutions and companies.
d) Non-resident individuals or institutions.

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