The Central Bank of Oman (CBO) will issue RO300m ($779m) of government development bonds on 9 August.

The sovereign bonds will have a coupon rate of 3 per cent a year and a five-year maturity.

The CBO is targeting both local and international investors with the issuance, despite it being in domestic currency.

Oman had announced plans to issue sukuk (Islamic bonds), for the first time this year, but the second major issuance of 2015 is conventional. The CBO created an Islamic finance department in July to deal with the sultanate’s growing Islamic banking sector.

Sukuk are more expensive and more complex to structure.

The CBO issued RO200m of bonds in February, with a coupon rate of 4.5 per cent. They were oversubscribed by RO75m.

Hamood Sangour al-Zadjali, executive president of the CBO, told MEED in February that the bank would issue RO600m of bonds in 2015, of which RO400 on the domestic market, to cover Oman’s budget deficit.

The sultanate projected a deficit of RO2.5bn in 2015, equivalent to 8 per cent of GDP. It expected to fund most of it using previous surpluses and reserves.

The IMF has warned that Oman’s spending planned would lead to a deficit of 14.8 per cent of GDP, taking lower than expected oil prices into account.

The increase in the size of the issuance may indicate that Muscat has taken these numbers into account.