Moody’s downgrades Oman to junk, outlook negative
DUBAI: Rating agency Moody’s downgraded Oman’s credit rating to junk, joining other rating agencies, and said its outlook for the rating is negative, citing fiscal challenges in an environment of moderate oil prices.
Moody’s downgraded the longterm issuer and senior unsecured bond ratings of Oman to Ba1 from Baa3, it said in a statement late on Tuesday. Baa3 is Moody’s lowest investment-grade rating.
“Thekeydriverof thedowngrade is Moody’s 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,” the rating agency said.
Fitch and S&P had both downgraded Oman to junk earlier.
The oil producer’s state coffers have been hit hard by a slump in oil prices in recent years, resulting in a wide budget deficit that the country is only slowly managing to tame.
Moody’s said Oman could face external vulnerability as wide fiscal deficits will contribute to wide current account deficits, perpetuating Oman’s dependence on steady inflows of external financing.
It said the negative outlook reflects the risk that “foreign investors’ willingness to finance Oman’s large deficits at relatively low costs could weaken, exacerbating the sovereign’s external vulnerability and raising government liquidity pressures.” — Reuters