(Bloomberg) -- Oman waded back into the international debt market for the first time in more than a year with a $2 billion bond sale after raising the possibility of assistance from its Gulf neighbors.The sultanate sold $1.25 billion in seven-year securities on Wednesday, as well as $750 million in notes maturing in 2032, according to a person familiar with the deal. It’s in talks to win support from some states in the region, according to its bond prospectus.Derivatives traders have pared back wagers for a devaluation of the Omani rial on anticipation that the wealthier Gulf states will come to the country’s rescue -- as they did for Bahrain two years ago -- if its peg to the dollar comes under threat.Oman has lagged most peers in implementing fiscal reforms despite dwindling reserves and a budget deficit S&P Global Ratings estimates could reach 18% of gross domestic product this year. The government was facing increasing pressure to tap global debt markets as a widening fiscal shortfall leaves the sovereign underfunded by about 1.3 billion rials ($3.4 billion) to 1.4 billion rials, according to Morgan Stanley.“Given the weakness in external balances, the buyers will likely be those who ascribe a greater probability of support if it comes down to it, in the Bahrain-type of model,” said Todd Schubert, head of fixed-income research at Bank of Singapore.The sultanate’s long-standing role as a mediator on regional and international issues, including with Iran, and its geographical position on one of the world’s busiest shipping lanes, make its stability important to Gulf states and international allies like the U.S.At the same time, Oman’s resistance to taking sides in regional disputes and adopting Saudi Arabia’s foreign policies could complicate efforts to secure help from its neighbors.Debt ComebackOman forged ahead with its borrowing plan just days after S&P cut its debt rating to B+, four rungs below investment grade. While the government said it wants to introduce a delayed 5% value-added tax in April, S&P said fiscal austerity measures will probably only be rolled out gradually.Under a medium-term fiscal program created to strengthen public finances, Oman also plans to introduce income tax on high earners, according to the bond prospectus.“The new deal comes at a tricky time for the country,” said Abdul Kadir Hussain, the head of fixed-income asset management at Arqaam Capital in Dubai. “The market knows they need the funding. It’s relatively close to year-end, so investors generally tend to get a bit defensive around this time of the year anyway.”Underscoring the hurdles, Turkey’s sovereign wealth fund and Ukraine’s state-controlled oil and gas company Naftogaz Ukrainy pulled debt offerings on Tuesday.Read More: Axed Bond Deals Show Yield Hunt in Emerging Markets Has LimitsDebt PlanOman’s government sold the notes maturing in 2027 at a yield of 6.75%, down from its initial guidance in the 7% area. The 12-year securities, meantime, priced at 7.375%, down from initial guidance of about 7.625%, the person familiar with the matter said, asking not to be identified because they’re not authorized to speak about it.Oman’s bonds are the worst performers in the region this year, and, until now, the country had stayed out of the market after raising $3 billion last year.“This will significantly reduce the pressure to raise domestic debt or draw down their reserves,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “The funding requirement will remain high going forward, so continued access to the international debt market is important.”(Updates with bond pricing in second paragraph, final yields in twelfth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.