Muscat – Fitch Ratings has revised its outlook on OQ Group, Energy Development Oman (EDO), Omantel, and Nama Electricity Distribution Company (NEDC) to positive from stable, while affirming their long-term issuer default ratings (IDRs). The rating actions follow the agency’s upgrade of Oman’s sovereign rating outlook last week.

On December 18, Fitch revised the outlook on Oman’s long-term foreign-currency issuer default rating to positive from stable, while affirming the IDR at BB+.

OQ Group

Fitch affirmed OQ’s long-term IDR at BB+, noting that the rating is constrained by Oman’s sovereign rating (BB+/Positive) due to OQ’s strong ties with the Omani government. OQ, which is fully owned by the government through the Oman Investment Authority (OIA), was established to consolidate and strengthen Oman’s oil and gas sector, the agency noted.

‘OQ’s rating is closely linked to that of the sovereign, in line with Fitch’s government-related entities (GRE) rating criteria and parent-subsidiary linkage rating criteria,’ Fitch said.

OQ’s standalone credit profile (SCP), as per Fitch, is rated bbb- and is supported by low leverage, declining debt, a conservative financial policy, and a successful operational track record.

However, Fitch cautioned that OQ’s concentration of operations in Oman and potential risks from future partial divestitures of some key operating companies could pose challenges.

Energy Development Oman

Fitch affirmed EDO’s long-term IDR at BB+. Similar to OQ, EDO’s rating is constrained by its ownership ties to the Omani government. Fitch highlighted EDO’s strong cash flow generation, supported by long-term gas sale contracts and a flexible royalty structure, as key strengths.

However, Fitch noted that EDO’s standalone credit profile of bbb+ is constrained by a business model focused exclusively on upstream oil and gas, limited diversification, and a mature reserve base with a lower proved reserve life compared to peers.

Fitch expects EDO to maintain a strong financial profile until at least 2028, despite rising capital expenditures and tax obligations.

Omantel

Fitch affirmed Omantel’s long-term IDR at BB+, noting the company’s rating is also constrained by Oman’s sovereign rating. Omantel is 51% owned by the Omani state, and its rating is closely linked to the government, according to the agency.

According to Fitch, Omantel’s standalone credit profile remains at bbb, supported by its market leadership in Oman and diversification from its minority stake in Zain Group. However, Fitch pointed out the increasing competitive pressure from Vodafone Oman and the growing mix of wholesale fibre services as potential headwinds for Omantel.

Fitch also affirmed the BB+ ratings for Oztel Holdings SPC Limited’s senior unsecured $900mn notes (due 2028) and Otel Sukuk Limited’s $500mn sukuk trust certificates (due 2031), with Recovery Ratings of RR4.

Nama Electricity Distribution Company

Fitch affirmed NEDC’s long-term foreign- and local-currency IDRs at BB+. The rating action follows the revision of Oman’s sovereign outlook to positive from stable. Fitch said NEDC’s support score assumes “strong” expectations of government backing, consistent with the sovereign’s positive outlook.

Should Oman’s rating be upgraded, Fitch indicated that it would likely upgrade NEDC’s standalone credit profile by one notch, potentially aligning its IDRs with the sovereign rating.

The outlook revisions reflect a more positive view on the Omani government’s financial position and the potential for broader economic stability in the country.

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