Fitch rates Oman Electricity notes BBB

Fitch Ratings said it assigned a BBB senior rating to the $1 billion outstanding notes issued by Lamar Funding Ltd. and guaranteed by Oman Electricity Transmission Co. SAOC. The parent company has a BBB long-term issuer default rating, and the outlook is stable.

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

Fitch expects negative free cash flow for 2017-2021 due to the substantial capex program of about OMR 500 million, which is expected to be funded by increased debt of about OMR 250 million and cash flow from operations. The agency expects FFO-adjusted net leverage to increase to about 7x in 2018 from 5x in 2016 before decreasing to around 6x toward the end of the forecast period.

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