‘Under pressure’ Oman gets low investment-grade rating

A proposed issuance of dollar-denominated Omani government bonds has received a provisional Baa1 rating from agency Moody’s.

The rating is at the lower end of the investment-grade category and is three notches away from non-investment grade, or “junk”, status.

“Despite credit positive economic diversification efforts Oman’s economy remains dependent on the oil and gas sector, and competitiveness remains under pressure,” said Moody’s in a credit research note.

The agency predicts economic growth in Oman of 2% a year until 2020, significantly lower than the average 3.8% growth achieved between 2011 and 2015.

“Together with the fall in nominal GDP in 2015 and 2016 triggered by the collapse in oil prices, this will crimp government and private sector incomes,” said the agency, referring to the falling growth rate.

Moody’s noted that Oman has the second-lowest proven oil reserves among the oil producing GCC nations and that its production costs have recently increased due to the use of enhanced recovery technology.

©2017 funds global mena

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