What is our trading focus?
Solid investment grade sovereign vs below investment grade sovereign
SAUDIARABIA-2.375-26OCT21 – Saudi Arabia sovereign bond
SAUDIARABIA-4.5-26OCT46 – Saudi Arabi sovereign bond
ABUDHABI-2.125-03MAY21 – Emirate of Abu Dhabi sovereign bond
The triggers of the crisis:
Oman’s dependence on oil revenue has been reduced over the past years, but it remains very significant. The country is the second most exposed, after Bahrain, to low oil prices in the GCC economies.
The Omani external breakeven – the oil price that it needs to cover the cost of imports – is at around $56 a barrel, double that of the United Arab Emirates. The decline in oil price has already increased pressure on the currency and could put at risk the dollar peg if it lasts longer. Since 1986, Oman has maintained a peg of 0.3849 rial to the USD but, without abundant FX reserves (estimated at US$17bn) and looming debt crisis, the country might be forced to loosen the grip on its currency, as it has been recently the case for Egypt.