Oman weighs legislation to enable the issuance of green, blue and social bonds

    20 Jul 2021

    As part of its continuous development efforts to enhance and diversify the capital market in Oman with various types of fundraising instruments to meet the issuers’ and investors’ needs, the Capital Market Authority (CMA) has come up with a new draft Regulation for Bonds and Sukuk, Oman Observer reports. It includes the new requirements for Sustainable and Responsible Investment (SRI) bonds and Sukuk meant for the issuance of sustainable, green, blue, and social bonds and Sukuk, including waqf Sukuk.

    (A Sukuk is a sharia-compliant bond-like instrument used in Islamic finance. Sukuk involves a direct asset ownership interest, while bonds are indirect interest-bearing debt obligations. Both Sukuk and bonds provide investors with payment streams; however, income derived from a Sukuk cannot be speculative that would make it no longer halal).

    The new draft Regulation for Bonds and Sukuk aims to consolidate and enhance the earlier bonds and Sukuk regulations issued separately, said the Authority in a statement.

    The move comes as Oman prepares to open up the country to potentially billions of dollars in investment in, among other areas, renewable and alternative energy-based projects. They include mega-developments centering on green hydrogen schemes that would ideally be funded by sustainable-type green finance. This broader vision is also in line with Oman’s Vision 2040 objectives.

    In addition, the new requirements for SRI bonds and Sukuk aims to encourage capital market fundraising for sustainable development and provide clarity for those who wish to issue such SRI bonds and Sukuk from Oman and attract a broader participation and investor base subscribing to such issuances, including foreign investors.

    The proposed requirements have been benchmarked against international best practices (including the World Bank) and are in line with the United Nation’s Sustainable Development Goals.

    “As part of the CMA’s continuous market consultations with the public, we are extending these draft requirements for comments which are available on the CMA’s website. We would greatly appreciate any comments within three weeks from July 7, 2021. The existing draft regulation is not final, and any feedback received could be used to enhance these requirements further,” the Authority added.

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