S&P puts Oman on CreditWatch with negative implications

PTI Dubai | Updated on March 09, 2011

Standard & Poor’s Ratings Services has placed its ‘A/A-1’ long-term and short-term local and foreign currency ratings on the Sultanate of Oman on CreditWatch with negative implications. At the same time, the rating agency has left unchanged Oman’s ‘AA-’ transfer and convertibility assessment.

“We do not believe recent events have affected the likelihood of the sovereign restricting private sector access to foreign exchange reserves needed for debt servicing. We have also placed the ‘A’ ratings on Oman Power and Water Procurement Co,” S&P said. “SAOC on CreditWatch Negative, given that its ratings are equalised with those of the sovereign,” it said.

“The CreditWatch Negative placement reflects our view that the current social unrest in the country and the possible repercussions of regional conflicts could increase political risks in Oman, which might eventually also negatively affect economic growth and public finances.

As recent events in the region have shown, political risk from popular discontent can mount very quickly and can undermine political stability. If tensions were to escalate in Oman, it could lead to Oman’s ratings being lowered within the next three months,” it added.

Similarly, if the government’s fiscal response to political pressures were to undermine Oman’s comparatively strong public finances, or if exports of Oman’s oil or gas products were to be affected, Oman’s external position could weaken and the ratings could be lowered.

On the other hand, if the government is able to address public grievances without putting too much burden on public finances and external investor confidence, then we believe the ratings could stabilise at the current levels, the agency further said.

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Published on March 09, 2011
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