The government of Oman has chosen five banks to arrange the sultanate's first international bond issue in almost 20 years, sources aware of the matter said on Thursday.

The upcoming US dollar-denominated issue comes as Oman, like other Gulf states, looks to tap international bond markets to shore up state finances pressured by low oil prices.

Oman has chosen Citi, JP Morgan, Mitsubishi UFJ Securities, Natixis and National Bank of Abu Dhabi to arrange the bond, the sources said, who spoke on condition of anonymity as the information isn't public.

The Finance Ministry did not respond to a request for comment.

The sale will be structured to comply with Reg S/144a regulations, meaning the transaction can be sold to investors in the US, and is targeted to happen in the second quarter, according to the sources.

However, other bankers cautioned that given a truncated time frame in the second quarter, with the holy month of Ramadan commencing in early June, and the amount of work to be done to prepare an offer after such a long absence from international markets, a deal may not emerge until the third quarter.

Reuters reported in February that Oman was seeking to sell the bond in the second quarter and had invited a small group of banks, most of which had participated in the sultanate's $1 billion sovereign loan earlier in the year, to pitch for arranger roles.

One notable absentee from the bond arrangers is Gulf International Bank, which was one of three banks - along with Citi and Natixis - to underwrite the loan before it was sold to other lenders.

Oman, rated A3 by Moody's and BBB- by Standard & Poor's, joins other Gulf sovereign issuers in tapping international bond markets in 2016: Abu Dhabi is currently meeting fixed income investors ahead of its first bond issue in seven years, while Bahrain and Sharjah have already sold a bond and a sukuk issue respectively this year.

Oil's plunge since 2014 has hit Oman's finances hard. Its state budget swung to a deficit of OR4.07 billion ($10.6 billion) in the first 11 months of 2015 from a surplus of OR233.4 million a year earlier. To bridge the deficit, Oman has begun spending cuts, tax rises and fuel subsidy reforms.

The country has an extended domestic borrowing programme, including regular Treasury bill auctions. The borrowing is adding pressure to liquidity in the local banking system and forcing the government to raise money abroad.

Oman's central bank executive president, Hamood Sangour Al-Zadjali, said in February the government might issue bonds by the middle of this year as part of a plan to borrow up to $10 billion from abroad. - Reuters