Trowers & Hamlins has advised Oman on its first issue of sovereign Islamic bonds, a 250 million Omani rial ($650 million), five-year sukuk with an ijara format.

The first issue is a step towards developing Oman's Islamic finance industry and gives the government a fresh channel to raise money, said Reuters. It was open to sophisticated investors - usually taken to mean fund managers, banks and other institutions, as well as wealthy individuals - with a minimum subscription of 500,000 rials.

The issue will give the country's Islamic banks, insurance firms and funds a badly needed tool to manage their money more efficiently, which could help them to become more profitable.

Oman launched Islamic finance, which follows religious rules such as a ban on interest payments, later than other Gulf Arab countries, granting licences to two sharia-compliant banks, Al Izz Islamic and Bank Nizwa, in 2013.

There are also half a dozen Islamic windows of conventional institutions; together, the banks and windows account for about 5 percent of the country's total banking assets.

The sovereign sukuk, which will be listed on the Muscat Securities Market, may provide a benchmark which encourages private Omani companies to issue Islamic bonds.

The issue also allows the government to begin tapping a new source of funding at a time when low oil prices are slashing its export revenues and hurting its finances. The government has boosted domestic sales of conventional bonds this year to cover a big budget deficit.