Fitch applies BBB to Oman Electricity IDR, notes

Fitch Ratings said it assigned Oman Electricity Transmission Co. SAOC a long-term foreign-currency issuer default rating of BBB and a long-term local-currency issuer default rating of BBB.

The outlooks are stable.

The agency also assigned a BBB(EXP) expected rating to the upcoming senior unsecured notes.

The new notes issued by OmGrid Funding Ltd. (Finco2) will be unconditionally and irrevocably guaranteed by Oman Electricity and will rank pari passu with other unsecured obligations of Oman Electricity. The notes to be issued by Finco2 are expected to have a change of control clause if state ownership falls below 51%, a cross-default provision ($40 million), and negative pledge covenants.

Proceeds will be used to fund capex and general corporate purposes.

Oman Electricity is indirectly fully owned by the Sultanate of Oman and has in the agency’s view strong operational and strategic links with the immediate parent, Electricity Holding Co. SAOC, EHC, and the ultimate parent, the state. The moderate legal links are in Fitch’s view supported by Article 67 of the sector law. The strength of the parental links is reflected in the one-notch uplift from Oman Electricity’s standalone profile of BBB-.

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