Moody's downgrades Oman

Moody's Investors Service said it downgraded the long-term issuer and senior unsecured bond ratings of the government of Oman to Ba1 from Baa3.

The outlook remains negative.

The downgrade was driven by an expectation that the scope for fiscal consolidation will remain more significantly constrained by the government's economic and social stability objectives than it had previously assessed.

In an environment of moderate oil prices, Oman's fiscal metrics will weaken to a level that is consistent with a lower rating, Moody's said.

Notwithstanding Oman's inherent credit strengths that provide some resilience to potential future shocks, persistently wide fiscal deficits will contribute to wide current account deficits, perpetuating Oman's dependence on steady inflows of external financing and denoting material external vulnerability, the agency said.

Moody's also said it downgraded the government of Oman's senior unsecured medium-term note program rating to provisional Ba1 from provisional Baa3.

The downgrades also apply to Oman Sovereign Sukuk SAOC, for which the backed senior unsecured ratings were downgraded to Ba1 from Baa3 and the backed senior unsecured medium-term note program was downgraded to provisional Ba1 from provisional Baa3.

Moody's also said it lowered Oman's long-term foreign-currency bond ceiling to Baa3 from Baa2 and long-term foreign-currency deposit ceiling to Ba2 from Baa3.

The short-term foreign-currency bond ceiling also was lowered to prime-3 from prime-2, while the short-term foreign-currency deposit ceiling was lowered to not-prime from prime-3.

Oman's long-term local-currency bond and deposit ceilings were lowered to Baa3 from Baa2, the agency said.

The downgrades reflect a view that prospects for new meaningful fiscal reforms are limited to a greater extent than previously assessed, Moody's said.

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