(MENAFN- Arab News)MUSCAT: Oman will open subscriptions on Thursday for its first sovereign issue of Islamic bonds taking a major step to develop its Islamic finance industry and giving the government a fresh channel to raise money.
Subscriptions to the rial-denominated sukuk will run until Oct. 22 the Ministry of Finance said in an e-mailed statement.
The sukuk will have a tenor of five years with their profit rate set through an auction and use the ijara structure a common lease-based Islamic format.
The issue will be open to sophisticated investors usually taken to mean fund managers banks and other institutions as well as wealthy individuals with a minimum subscription of 500000 rials ($1.3 million) the ministry added.
The size of the issue will be decided on completion of a book-building exercise. Previously Omani officials had said they expected the issue to be 200 million rials.
The issue is important for Oman's fledgling Islamic finance industry because it will give sharia-compliant banks insurance firms and funds a badly needed tool to manage their money more efficiently which could help them to become more profitable.
Oman launched Islamic finance which follows religious rules such as a ban on interest payments later than other Gulf countries granting licenses to two sharia-compliant banks Al Izz Islamic and Bank Nizwa in 2013.