Energy Development Oman issues debut OMR sukuk to support domestic capital market development

Energy Development Oman (EDO) has completed its first domestic sukuk, securing OMR 50 million and setting a milestone for Oman’s fixed-income landscape. As the inaugural local sukuk by an Omani government-related entity, the deal expands the country’s menu of Islamic financing options and lays groundwork for future issuances that could help mobilize capital for the nation’s energy transition.

Investor appetite was strong: orders surpassed OMR 80 million, with allocations to 29 participants spanning conventional and Islamic banks, insurers, money market funds, official institutions, and high-net-worth investors. This breadth signals a healthier, more diversified local investor base—an essential ingredient for financing long-duration infrastructure and clean energy projects over time.

Deal snapshot and market significance

• Size and tenor: OMR 50 million, three-year maturity
• Placement: Private placement, priced via auction
• Economics: 4.40% profit rate; 4.41% average yield
• Benchmarking: A comparable three-year government bond recently yielded 4.28%
• Programme: First issuance under EDO’s OMR 1 billion sukuk programme
• Listing and oversight: Programme and debut issuance listed on the Muscat Stock Exchange, with documentation cleared by the Financial Services Authority and aligned to international disclosure standards
• Structure and roles: Hybrid Ijara–Wakala structure; MCD as registrar, certificateholders’ agent, and paying agent; National Bank of Oman as issue manager; Muzn Islamic Banking as Shari’a advisor; Trowers & Hamlins as legal counsel

By anchoring a local sukuk benchmark for a government-related issuer, EDO’s debut helps set pricing references and documentation standards for future transactions. In practical terms, this can lower friction for other issuers—public and private—who seek to tap Omani savings for domestic development priorities, including grid upgrades, efficiency improvements, and renewable power deployment.

A financing bridge for energy transition goals

EDO, established by Royal Decree in December 2020 as Oman’s national energy company, holds a central role in the country’s evolving energy economy. The company oversees government-owned assets in Block 6—where it holds a 60% stake in the oil concession and full ownership of the gas concession—and is tasked with ensuring secure, efficient, and cost-effective energy in support of Vision 2040. Its strategy includes optimizing operating models, consolidating procurement and supply chains, strengthening cash flows, and developing new revenue streams for the state.

While the new sukuk is not labeled as a green instrument, the broader objective of deepening Oman’s fixed-income market aligns with the needs of a modernizing energy system. Stable, transparent domestic funding channels can underpin investments that balance hydrocarbons with renewables such as solar and wind—an area EDO has identified as key to Oman’s transition. Clear regulatory oversight, MSX listing, and internationally aligned disclosures further enhance investor confidence, which is crucial as the nation advances toward its 2050 net-zero ambitions.

Why this matters for Oman’s financial ecosystem

Several features of the transaction stand out for long-term market development:

• Diversified demand: Broad participation across banks, insurers, funds, institutions, and private investors suggests a growing capacity to absorb local fixed-income supply.
• Market reference point: Auction-based pricing and standardized documentation create a template that other government-related entities can follow.
• Shari’a-compliant depth: The hybrid Ijara–Wakala structure, tailored to local needs, helps widen access for Islamic investors and complements conventional funding channels.
• Transparency: FSA-approved disclosures and MSX listing support best practices that attract repeat investors and, over time, may encourage thematic issuances linked to sustainability outcomes.

EDO regards the issuance as a platform for future market activity, emphasizing continued engagement with investors and stakeholders. As subsequent tranches under the OMR 1 billion programme are considered, the resulting benchmarks could catalyze broader fixed-income participation—vital for financing resilient infrastructure and accelerating Oman’s clean energy projects at scale.

The sukuk may be modest in size, but its impact is outsized: it signals confidence in local capital formation, invites more Omani institutions and savers into structured, transparent instruments, and strengthens the financial plumbing required to fund the next phase of the country’s energy transition.