The private credit market in Oman has shown moderate growth in the last 12 months, with activity by non-bank finance companies and private lenders increasing modestly, estimated at low single-digit growth (approximately 3–5% year-on-year). Growth has primarily tracked SME demand and asset-based financing rather than expansionary credit. Although the private credit market remains narrow, with private creditors representing only a small share of total credit, there is an increased appetite for alternative financing as companies face constraints accessing traditional sources. Recent economic and regulatory developments, including measures to support SMEs and the ongoing implementation of Oman Vision 2040, have encouraged both borrowers and lenders to engage more actively in private credit transactions, shaping the pace and structure of deals over the past year. As the nation reforms its financial infrastructure to foster a more innovative, technology-forward ecosystem, the alternative financing sector is gaining momentum.

Private credit lenders were active in the SME, logistics and transport, construction, and manufacturing and light sectors, particularly for asset, equipment, vehicle, and fleet finance, as well as short-term working capital facilities.

Banks remain the most prominent lenders in the Omani market. Public debt markets have grown significantly over the past six months, with total issuance of approximately OMR4.98 billion, representing a 15.6% year-on-year increase, compared to the private credit market. This growth is driven by recent banking regulations and government-led issuance of sovereign and sukuk bonds, including OMR75 million and OMR15 million development bonds, as well as OMR150 million sukuk. Trends indicate that large corporations typically access public debt, while SMEs continue to rely on private credit and crowdfunding alternatives.

Given that the private credit market is in the early stages of development, banks and private credit funds cannot yet be described as competitors. On the contrary, evidence suggests that banks are increasingly supporting the development of the private credit market by providing financing to private credit lenders.

Most acquisition financing over the past 12 months has continued to rely on traditional bank lending rather than private credit. Private credit has played a limited role, primarily in smaller or mid-market transactions where borrowers require flexible or bespoke financing solutions that banks may not provide. Overall, banks remain the preferred source of funding for large-scale acquisitions, while private credit is still emerging as an alternative in the market. See 1.1 Private Credit Market.

As the private credit market in Oman is in its early stages of development, there have been no major challenges or obstacles to its expansion. In fact, current regulations provide incentives for growth, including tax exemptions for investment funds and financial trusts, as well as benefits for foreign investors bringing capital into Oman.

The primary focus of private credit providers has been on founder-owned companies and SMEs. As banks tend to prioritise financing government-backed contracts, larger corporations, and established family groups, SMEs and non-sponsored companies that need flexible capital often turn to private credit providers. Private credit is also accessible to public companies where appropriate. There is an increasing trend among private credit providers to offer “pink loans,” aimed at financing women-owned businesses.

The recurring revenue market in Oman is still in its early stages. As such, private credit providers often do not offer bespoke services in this area. Lending remains predominantly asset-backed and conservative.

Typically, private credit transactions in Oman range from OMR500,000 to OMR5 million. Fund sizes are modest, generally between OMR10 million and OMR50 million. Most private credit providers are small, rely on their own balance sheets, and have a conservative investor base. While incentives exist to attract foreign investment and support Oman’s Vision 2040 goals, awareness of these regulatory frameworks remains limited, which can constrain fundraising efforts.

Oman does not regulate private credit as a separate sector, and there are no pending proposals to introduce specific regulations for private credit funds. The Central Bank of Oman currently oversees all lending activity, meaning that any systematic or commercial lending requires a licence, regardless of how it is structured. Recent reforms have tightened these requirements, making unlicensed direct lending more difficult for foreign private credit providers. Capital-market reforms have primarily benefited bond and sukuk investors, rather than private credit lenders.

Whether a lender requires a licence to provide loans to Omani borrowers depends on the nature of the activity. Local lenders must obtain a licence from the Central Bank of Oman. Licensing requirements for foreign lenders vary depending on the specifics of the transaction, including whether the lending is isolated, offshore, or non-systematic. Taking security over assets located in Oman is permitted, subject to compliance with local perfection and enforcement rules.

Oman does not have a dedicated regulator for private credit activity. Regulation is activity-based: the Central Bank of Oman oversees lending and finance activities, while the Financial Services Authority regulates securities, funds, bonds, and sukuk.

There are no explicit restrictions on foreign investment in private credit funds (apart from customary know your customer (KYC), anti-money laundering and combating the financing of terrorism (AML/CFT), and sanctions requirements). Restrictions may arise indirectly if activities amount to regulated lending, which trigger licensing and registration requirements. Foreign ownership is permitted under Oman’s Foreign Capital Investment Law.

There are no specific compliance or reporting requirements that apply solely to private credit providers in Oman. Applicable obligations depend on the structure of the transaction and may include AML/CFT compliance, registration of security interests, and ongoing reporting obligations for licensed entities.

General competition law applies to private credit providers. Club lending is permitted, provided it does not amount to unlicensed banking activity. The Competition Protection and Monopoly Prevention Center is not currently focused on private credit.

Private credit transactions in Oman are typically structured as bilateral secured loans. Common structures include term loans, asset or equipment finance, and receivables-backed facilities. Revolving facilities are rare in the private credit market, although banks occasionally offer them. More complex structures, including delayed draw facilities, unitranche, mezzanine, or covenant-lite loans, see minimal adoption in the private credit market.

Key documents in private credit transactions typically include standard loan agreements, security documents, and guarantees. Agreements among lenders are often negotiated on a per-transaction basis. First out-last out transactions are not common; however, contractual provisions can be included to facilitate such arrangements according to lenders’ instructions. Beyond the documents required for security registration, there is no market standard for private credit documentation.

Foreign lenders are not restricted from providing private credit or taking security as long as they comply with the registration and licensing (if applicable) requirements outlined in 2.1 Licensing and Regulatory Approval.

The proceeds from private credit transactions are typically used for working capital or the purchase of assets and equipment. Acquisition financing through private credit is limited, as most mergers and acquisitions are funded by banks or equity. Private credit is therefore not a primary tool for take privates and other acquisition financings.

Debt buybacks are generally permitted under Omani law in private credit transactions and others as a matter of contract and commercial practice.

There have been no significant legal or commercial developments that would have required changes to the legal documentation.

Junior/hybrid capital in Oman is limited and primarily used in larger or sponsor-backed deals. Common structures include subordinated loans, mezzanine-style debt, and, in regulated capital markets, perpetual subordinated bonds. Terms in junior/hybrid deals differ from senior secured loans by including subordination provisions (such as payment standstill), intercreditor arrangements, and, in some cases, looser financial covenants. HoldCo deals are typically secured through pledges over HoldCo shares.       

Payment in kind features are not common in Oman’s private credit market, as providers generally prefer cash payments, although they may occasionally be included depending on the borrower-lender arrangement. While banks typically require amortisation, private credit providers do not usually impose it.

Depending on the circumstances of the private credit transaction, providers in Oman may include call protection in their agreements. Prepayment penalties and make-whole clauses are uncommon, with lenders generally preferring soft call options that allow early repayment under certain conditions. Terms are typically negotiated on a case-by-case basis and depend on the lender-borrower relationship.

Principal repayments are generally not taxable under the Omani Income Tax Law. A 10% withholding tax (WHT) applies to specified Omani-sourced payments to non-residents without a permanent establishment in Oman; however, this may not apply where a double tax treaty exists between Oman and the investor’s country of residence. A recent Royal Directive provides for an indefinite suspension of WHT on interest for foreign investors. Private credit providers typically address WHT concerns by including gross-up provisions in their agreements.

Private credit lenders making loans to, or taking security and guarantees from, Omani entities may need to consider value added tax (VAT). The VAT treatment depends on whether the transaction is classified as an exempt financial service or a taxable supply under Omani VAT regulations. In addition, the creation, registration, and perfection of security interests and guarantees attract government and registration fees.

See 4.1 Withholding Tax for information on WHT. Depending on the nature of the activity and the extent of a foreign private credit provider’s involvement in the Omani market, the provider may be deemed to have a permanent establishment in Oman, potentially triggering additional tax liabilities. These concerns may be mitigated through appropriate structuring, including the establishment of a collective investment fund or financial trust licensed by the Financial Services Authority. Collective investment funds offered for public subscription and financial trusts are exempt from income tax in Oman.

Assets typically available as collateral to private credit providers in Oman include real estate, business assets, shares, receivables and contractual rights, bank accounts, and movables/equipment/inventory. The form of security and perfection requirements vary by asset type, and failure to comply with applicable formalities can materially weaken enforceability and priority, particularly against third parties or in insolvency.

Registration Requirements

• Real estate is commonly secured by a legal mortgage over freehold or leasehold interests and must be registered with the Ministry of Housing and Urban Planning.
• Commercial enterprises and business assets are typically secured by a commercial mortgage registered with the Ministry of Commerce, Industry and Investment Promotion. Such registrations are generally valid for five years and must be renewed to maintain priority.
• Shares (in SAOGs (public joint stock companies) or SAOCs (closed joint stock companies) are usually secured by way of a share pledge. For Muscat Stock Exchange–listed securities, pledges are registered through Muscat Clearing and Depository systems using prescribed forms and procedures.
• Receivables and contractual rights are commonly secured by assignment or pledge, often requiring notice to counterparties and careful drafting to ensure enforceability.
• Bank accounts are typically secured by an account pledge and/or assignment of rights, usually supported by bank acknowledgements or control-style arrangements.
• Movables, equipment, and inventory have historically been secured through possessory pledge concepts, although practical enforceability depends on the nature of the asset and possession arrangements.

Perfection

Perfection generally requires execution of security documents before designated officials, completion of prescribed registration forms, and payment of applicable government fees. Failure to perfect security may result in invalidity or unenforceability against third parties and loss of priority.

Indicative Timing and Costs

In practice, share pledges and registered mortgages are typically completed at closing or immediately post-closing, often within days to a few weeks depending on the relevant authority. Notices and acknowledgements for receivables and bank accounts are often completed post-closing but must be in place before reliance for priority or enforcement purposes.

Registration costs vary by asset type. By way of indication, commercial mortgage registration fees have been cited at approximately OMR130 (renewable), while legal mortgage registration fees may be calculated at around 0.5% of the secured amount. Additional costs commonly include legal fees, translation, notarisation, and administrative charges.

Omani law permits the creation of a floating charge or similar security over a company’s present and future assets; however, such security is not commonly used in practice. Instead, security in private credit transactions is typically fixed and asset-specific, as these provide greater certainty of control and enforceability compared to floating charges.

Omani entities may grant downstream, upstream, and cross-stream guarantees, subject to proper corporate capacity and approvals under the Commercial Companies Law. A key limitation is the requirement that a guarantee must confer a demonstrable corporate benefit on the guarantor; otherwise, it may be challenged as a misuse of company assets, particularly in an insolvency scenario.

Upstream and cross-stream guarantees granted by limited liability companies (LLCs) or sole proprietorship companies typically require partner resolutions unless they fall within the ordinary course of business. Guarantees granted by SAOCs or SAOGs for third-party obligations, especially where the obligation is not the company’s own, generally require general assembly approval and may trigger related-party governance and disclosure requirements where parent or sister companies benefit.

Guarantee limitations are relevant both at the time the guarantee is granted and at the point of enforcement or insolvency. Adequacy of credit support is typically addressed through clear shareholder/board approvals and documented corporate benefit analyses. Transactions may also be structured to mitigate guarantee limitations through direct lending to the benefiting entity, on-lending arrangements, payment of guarantee fees, or by ring-fencing guarantees to specific obligations.

Where different tranches of debt benefit from different levels of guarantees, the allocation of proceeds and recoveries is governed by contractual intercreditor arrangements. Waterfall and sharing mechanics are used, rather than statutory collateral allocation rules. However, priority of claims is addressed in 7.2 Waterfall of Payments.

Under Omani law, a target company is generally not prohibited from granting guarantees, security, or financial assistance in connection with the acquisition of its own shares. Such arrangements are typically structured carefully to comply with the target’s corporate governance requirements.

A company’s ability to grant security or guarantees may be limited by its corporate governance framework. Depending on the company’s constitutional documents, board or shareholder approval may be required prior to granting such security or guarantees. Registration and perfection of security interests may involve government fees and associated costs (see 5.1 Assets and Forms of Security). Oman recognises retention of title and anti-assignment provisions, and properly perfected securities are generally enforceable, making it difficult to override these rights. There are currently no specific statutory “hardening” periods in Oman.

Security is typically released by reversing the perfection steps taken when the security was granted, in accordance with the terms of the contractual agreement. Deregistration procedures are asset-specific and may involve multiple Omani authorities, depending on the type of security.

Oman recognises multiple liens, with the priority of competing security interests generally determined on a first-to-register basis. Contractual subordination between lenders is permitted, allowing parties to agree on the relative ranking of their claims. However, in insolvency, the enforceability of contractual subordination may be limited, as government claims take priority over private creditors regardless of registration order.

Oman does not have an extensive statutory framework governing debtor-in-possession financing or automatic priming liens. Any priming of existing security interests requires the consent of existing secured creditors and is typically governed by the terms of intercreditor agreements.       

Cash pooling in Oman is primarily bank-led, with very limited use in private credit transactions. Hedging arrangements are also uncommon in private credit deals, and where they are implemented, they are typically structured offshore.

In Oman, it is generally not customary for a security or collateral agent to hold liens on behalf of multiple lenders, as there is no statutory regime governing collateral agents. Security is typically granted directly to each lender. Security agent structures are primarily seen in club deals or transactions governed by foreign law.

Where a loan is assigned, the related security generally needs to be re-taken in the name of the new lender to maintain enforceability and priority.

Private credit lenders typically address these limitations by using fronting banks to centralise enforcement rights, restricting or regulating loan transfers to preserve security structures, and relying on share pledges, intercreditor arrangements, and contractual mechanisms to streamline control and manage operational complexity.

A non-bank secured lender may enforce its collateral upon the occurrence of events of default as set out in the loan agreement, such as non-payment, insolvency of the borrower, or breaches of covenants. Enforcement in practice typically requires a court judgment or order to sell pledged assets or commercial mortgages, as self-help remedies are limited. Securities must be properly registered and perfected in accordance with applicable regulations to be enforceable. Non-bank private credit providers should ensure that the borrower has the authority to grant security and (if applicable) that necessary board or shareholder approvals have been obtained, as deficiencies may undermine enforcement. In a typical private credit restructuring, lenders generally enforce share pledges rather than pursuing immediate liquidation of operational assets, which can be slower due to court procedures.

Omani law permits parties to select a foreign law as the governing law of their contract. Submission to a foreign jurisdiction is generally allowed; however, enforcement in Oman is not automatic and may be subject to local recognition requirements, which is why arbitration is often preferred in practice. Waivers of immunity are typically included in sovereign and sovereign-linked transactions, but their effectiveness depends on the nature of the counterparty and public policy considerations.

Foreign court judgments are generally enforceable in Oman, but enforcement is subject to certain conditions rather than a full retrial of the merits. Several foreign jurisdictions have reciprocity agreements with Oman, which allow for simplified enforcement procedures. Oman’s ratification of the New York Convention facilitates the recognition and enforcement of foreign arbitral awards, which is why private credit providers often prefer arbitration to foreign court proceedings. Arbitration also enables more predictable cross-border enforcement, particularly when assets are located in multiple jurisdictions.

A foreign private credit lender’s ability to enforce rights under a loan or security agreement may be affected if the borrower enters bankruptcy, as claims and asset realisation must be determined in accordance with Oman’s insolvency framework. Defects in registration or perfection, such as unauthorised signatories, incorrect registration of securities, or expiry/non-renewal, can undermine priority and enforceability. Securities granted without the necessary board/shareholder approvals may also be challenged as unenforceable. Even with a foreign judgment, enforcement requires compliance with conditions such as proper service, jurisdiction, and, where applicable, reciprocity. Practical constraints, including potential court delays, expert valuations, auctions, and debtor challenges, may further affect the timing and efficiency of enforcement.

The costs and duration of the enforcement process are highly fact-dependent, but because security enforcement typically requires court involvement and asset sale procedures, end-to-end enforcement can be lengthy and costly, particularly if contested. Expediting enforcement requires careful legal drafting from the outset, including correct documentation, proper registration and perfection of security, and clear default and acceleration provisions to reduce procedural disputes. Typical enforcement costs include security registration, court fees, expert valuations, legal fees, auction costs, and translation expenses. Out-of-court restructurings are often used to reduce delays and minimise costs compared to immediate court proceedings. Cost-management strategies include staged enforcement, use of alternative dispute resolution mechanisms, and prioritising control security such as shares or receivables to avoid value-destructive asset sales.

It is likely that the duration of enforcement processes may be significantly reduced in the coming months. Oman has introduced reforms to its judicial framework to improve efficiency, including the creation of the Court of Trade and Investment. The new Court is expected to provide specialised judicial expertise for business disputes and modernise procedures through its electronic platform, enabling faster dispute resolution and more predictable outcomes.

Enforcing against operating assets can often be value-destructive, which has led lenders to increasingly prefer workouts and governance/control solutions before pursuing liquidation. Court proceedings in Oman can be time-consuming, especially when contested by the debtor; to mitigate this, lenders typically take multiple layers of security and ensure that perfection is properly completed. Share pledges or equity cures may require shareholder actions, which can be managed through undertakings, enforceable voting arrangements, and carefully drafted conditions precedent. Foreign lenders can address operational constraints by appointing strong local counsel and incorporating arbitration provisions in loan agreements.

Oman’s Bankruptcy Law provides structured procedures, including preventive composition, restructuring, and liquidation. The commencement of such insolvency/restructuring proceedings affects a lender’s ability to enforce its loans, security, or guarantees, as creditor actions are generally channelled through a collective process where claims and asset realisation are managed by the insolvency framework. These processes may include a stay on enforcement, particularly under preventive composition or restructuring procedures, which are designed to provide alternatives to immediate liquidation. Court-appointed officials, such as administrators, trustees, or liquidators, typically control the process and are appointed by the court in accordance with the law. Recent government guidance has emphasised stakeholder rights and procedures, reflecting a policy focus on structured insolvency resolution.

Creditors in Oman are generally paid on a first-to-perfect basis. However, certain junior claims are almost always addressed despite their position in the waterfall. Employee and government claims are typically highly protected and prioritised in practice. Secured creditors’ recoveries depend on the perfection and priority of their security. Practical considerations, such as maintaining continuity of supply and customer confidence, can create pressure to make payments to other stakeholders, which is often managed through out-of-court settlements.

The duration of insolvency proceedings in Oman varies significantly depending on factors such as case complexity and the extent of disputes. Voluntary liquidations, however, are generally subject to a maximum three-year duration, which may only be extended with the approval of the competent authority. The process remains an evolving area of practice, with ongoing reforms aimed at improving efficiency. Recoveries for creditors are highly dependent on whether value is preserved through restructuring rather than liquidation, with courts often favouring rescue mechanisms. Secured creditors generally have better prospects of recovery when their security is properly perfected and underlying assets are identifiable. In cases involving heavy litigation, both timelines and recoveries can become less predictable.

Out-of-court solutions are commonly used in Oman to avoid court delays and preserve the going-concern value of the company. Typical measures include waivers, maturity extensions, covenant resets, and security top-ups. Where solutions involve equity injections, corporate governance changes, or enforcement of share security, board/shareholder co-operation may be required, which can slow down the process if the necessary quorum is not achieved. If the parties cannot reach an agreement, they may turn to the restructuring/preventive composition procedures under Oman’s Bankruptcy Law to formalise a plan and achieve the next best outcome.

See 6. Enforcement for enforcement risks and 7.2 Waterfall of Payments for priority dilution risk.

Transactions at an undervalue and dispositions that are prejudicial to creditors can often be challenged under Oman’s Bankruptcy Law. Common risk areas include granting late security or making preferential repayments shortly before insolvency. Related-party transactions may also be scrutinised and potentially set aside during insolvency proceedings. Lenders are typically advised to mitigate these risks by ensuring early perfection of security, maintaining clear consideration trails, and documenting proper board/shareholder approvals to defend against subsequent challenges.

Set-off is generally recognised in Oman upon insolvency, but its exercise is subject to statutory rules and court supervision. Contractual set-off clauses are commonly used; however, their enforceability in insolvency depends on the provisions of Oman’s Bankruptcy Law. Lenders should plan for court-supervised recognition of set-off rights once insolvency proceedings commence, rather than assuming automatic netting.

A typical private credit out-of-court restructuring often starts at a standstill, followed by information sharing, financial advisor plan, amendments to the plan, and security enhancement. Co-operation from board/shareholders is required if equity injections, asset sales, and similar solutions involving share security/control are involved. Compared to out-of-court restructuring, in-court processes can provide a formal framework to streamline stakeholder co-operation through a supervised plan. In-court process also provides further advantages such as structured claims verification and regulated asset realisation pathways.

Oman’s Bankruptcy Law is designed to facilitate collective solutions rather than require unanimous consent. Outside of court, dissenting lenders generally cannot be forced into a non-consensual restructuring unless contractual provisions expressly provide for it. Within court-supervised proceedings, the treatment of dissenting lenders is governed by statutory procedures, which ensure protections such as due process, transparency, and oversight of plan implementation and distributions. Lenders typically mitigate risks associated with dissent by perfecting security, strengthening intercreditor arrangements, and retaining the option to transition into formal court proceedings if consensus cannot be reached.

While Oman does not have a formal pre-pack or pre-arranged restructuring regime, expedited restructurings are achievable in practice where there has been substantial pre-negotiation among creditors prior to the commencement of court proceedings. The level of creditor alignment at filing is a key determinant of speed, where terms are largely agreed in advance, court-supervised restructuring tends to proceed more smoothly.

Balance-sheet restructurings are typically implemented through maturity extensions, repricing, enhanced security packages, and, in some cases, debt-for-equity or control-oriented solutions through share security, subject to board/shareholder co-operation where equity interests are affected. Courts generally uphold contractual arrangements, including restructuring support or voting agreements, provided they comply with applicable law and public order requirements. However, once court proceedings are initiated, such arrangements cannot override the statutory insolvency framework.