Moody’s upgrades Oman’s outlook to ‘positive’

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Muscat – Global credit rating agency Moody’s Ratings announced on Friday that it has upgraded its outlook on the Government of Oman to ‘positive’ from ‘stable,’ while affirming the sultanate’s Ba1 long-term issuer and senior unsecured ratings.

The rating agency also maintained its (P)Ba1 senior unsecured medium-term note programme rating for the Government of Oman.

‘The key driver for the outlook change to positive is the ongoing improvement in the government’s debt metrics, supported by elevated oil prices and prudent fiscal management, which increases the likelihood that Oman’s fiscal strength could be sustained at a level consistent with a higher rating,’ Moody’s said in its report.

Moody’s highlighted the fact that Oman’s reduction in government debt over the past two years was achieved without depleting its financial assets. A declining debt burden, particularly the foreign-currency portion, enhances the Omani government’s ability to withstand shocks, such as those caused by cyclical fluctuations in global energy markets or increases in global interest rates, according to Moody’s.

The affirmation of Oman’s Ba1 ratings is also underpinned by the country’s high per-capita income, moderate government debt burden and an improving track record of effective fiscal policy, the rating agency said.

Moody’s further noted that sustained improvements in Oman’s government debt metrics achieved during 2023 could lead to a higher rating.

‘The extent to which the rating can improve will depend on evidence of Oman’s increasing resilience to potential declines in global oil demand and prices, as well as longer-term credit risks related to the global carbon transition,’ the rating agency added.

Moody’s rating action also extends to Oman Sovereign Sukuk Company, a special-purpose vehicle (SPV) domiciled in Oman, whose obligations, in Moody’s view, are ultimately the responsibility of the Government of Oman. The agency affirmed the SPV’s Ba1 backed senior unsecured and (P)Ba1 backed senior unsecured medium-term note programme ratings with positive outlook.

Last year, Moody’s upgraded Oman’s sovereign credit ratings twice due to the sultanate’s lower debt burden amid supportive oil prices and fiscal reforms. In May 2023, Moody’s upgraded the Government of Oman’s issuer and long-term senior unsecured ratings to Ba2 from Ba3, maintaining a positive outlook. Then again in December 2023, Moody’s upgraded Oman’s long-term issuer and senior unsecured ratings to Ba1 from Ba2, while changing the outlook to stable from positive.