Sohar International closes $68.8M mandatory convertible bond issue
What's the deal? Sohar InternationalDealroom has a profile for this one. Try Dealroom → has closed a mandatory convertible bond issue worth roughly OMR26.47 million ($68.8M), selling 259.5 million bonds that will convert into ordinary shares at maturity. The Muscat-listed lender said the instrument reinforces its capital base without placing immediate pressure on cash, while giving shareholders a route to participate in future equity conversion.
Why now? The issue follows a stretch of active capital-raising. Sohar completed a OMR130M rights issue in 2024 — one of the largest on the Muscat Stock Exchange that year — and later raised OMR200M through perpetual subordinated bonds at a 6.75% coupon.
The bank's balance sheet has grown fast. Total assets hit roughly OMR9.13 billion at end of 2025, up from OMR7.36 billion a year earlier. Net loans rose to about OMR5.76 billion; customer deposits reached OMR6.83 billion.
Oman's wider economy is driving credit demand. Government-led investment in infrastructure, energy, logistics, and tourism — plus private-sector diversification — is pushing banks to bulk up capital and liquidity. The country's improved fiscal profile and lower sovereign debt ratios reinforce the trend.
Sohar is also expanding abroad. It won approval in 2026 for a representative office in Hong Kong and struck a partnership with EWPartnersDealroom has a profile for this one. Try Dealroom → to deepen Asia-GCC financial links — moves that demand stronger capital buffers.
What could go wrong? Mandatory convertible bonds eventually dilute existing shareholders when they convert to equity. Rapid loan growth — Sohar's non-performing loan ratio sits at about 4.6%, with coverage above 130% — can test provisioning discipline if economic conditions soften. And while the bank's capital adequacy ratio of roughly 17.3% sits above regulatory minimums, sustained expansion could narrow that cushion.
The signal: Sohar International's layered capital strategy — rights issue, perpetual bonds, and now convertibles in quick succession — reflects a broader pattern across Gulf banking, where lenders are racing to build Basel III-compliant buffers while Oman's diversification-driven credit cycle is still accelerating. The pace of issuance suggests the bank views the current macro window, underpinned by improved sovereign finances and rising infrastructure spend, as a time to lock in capital before competition for deposits and deal flow intensifies.
Read more: 1arabia.com
