By Yousef Saba
DUBAI (Reuters) - The government of Oman has signed a one-year $2 billion bridge loan with a group of international and regional banks, two sources with knowledge of the matter said on Wednesday.
The loan, which will be repaid with money raised from an international bond issuance, will bolster state coffers hit by low oil prices and the economic downturn caused by the coronavirus crisis.
The Omani finance ministry did not immediately respond to a Reuters request for comment.
Sources had previously told Reuters, Oman chose First Abu Dhabi Bank and Bank Muscat to coordinate the loan.
Oman could issue a bond in the next six months to repay the loan "as long as the market is there," one of those sources said.
The pricing was "relatively cheaper than the market" and the loan's structure will see the pricing stepped up over time, the source said.
Oman is a relatively small crude oil producer burdened by high levels of debt, making it more vulnerable to oil price swings than most of its wealthier Gulf neighbours.
Oman's fiscal deficit could widen to 16.9% of gross domestic product this year from a 7% deficit last year, the International Monetary Fund has estimated.
In June, ratings agency Moody's (NYSE:MCO) downgraded Oman deeper into junk territory to Ba3 from Ba2, citing risks related to its financing needs and diminishing buffers.
It has over $10 billion in external debt due in 2021 and 2022 that could add pressure to foreign exchange reserves if it is not rolled over.
Oman had said it planned to raise over $5 billion in debt this year to partly cover an estimated deficit of $6.5 billion, but that was before the pandemic and the oil price crash.