The government of Oman has approached banks for an international bond issue with tranches of five and 10 years as the country plugs a budget deficit caused by lower oil prices, banking sources familiar with the situation said on Tuesday.

The sultanate has asked international lenders to submit proposals for a US dollar debt transaction likely to be around $1 billion or more. Banks are expected to submit their proposals by the end of this week, said the sources.

One source said the government was keeping an open mind on whether the issue would be in the form of conventional bonds or sukuk.

Oman's undersecretary of finance Nasser al-Jashmi told Reuters: "As part of executing our funding plan, we have recently issued a request for proposals to a number of banks to act as issue managers.

Copyright Reuters, 2017