Muscat: Ahli Bank's subordinated bond issue has been oversubscribed by 160 per cent, according to a press release on Tuesday.
The issue size was 35 million Omani riyals with a tenure of seven years and call option for the bank at the end of five years. The bond will be listed in the Muscat Securities Market (MSM), providing liquidity to bondholders as well as providing additional investment opportunity.
Against the issue size of 35 million riyals, the bank received commitments for 55 million riyals, resulting in over subscription of the issue by 160 per cent.
"It is heartening to note that 99 per cent of the issue was subscribed by the domestic Omani investors, which shows the confidence of the Omani investors in Ahli Bank," said Abdul Aziz Al Balochi, CEO of Ahli Bank.
"The investors in the bonds are well diversified, including individuals, corporates, insurance companies and pension funds. Instead of going in for a subordinated loan [which is less cumbersome with simple procedure and documentation], we decided to go for issuance of subordinated bonds," he added.
"As a local Omani bank, we wanted to contribute and strengthen the hands of Capital Market Authority (CMA) in developing a vibrant bond market and hence, decided to go for a bond issue instead. We express our sincere gratitude to the Capital Market Authority and Central Bank of Oman for giving us all necessary approvals and for guiding us throughout the issue," he said.
By augmenting its Tier II capital and capital adequacy ratio, Ahli Bank is fully geared to tap the growth opportunities which the economy is expected to provide in the coming years. After the bond issue, the capital adequacy ratio of the bank stands at 20 per cent, well above the regulatory requirement of 12 per cent. The single borrower loan limit of the bank also will go up substantially, post bond issue. "We could raise this seven year bonds at an very competitive pricing of 5.5 per cent p.a. and we believe that this could further contribute towards development of a long term yield curve in Omani riyals," Al Balochi said.
