Bonds News

Moody's cuts Oman's rating by a notch to 'Ba2'

March 5 (Reuters) - Moody’s downgraded Oman’s credit rating deeper into junk territory on Thursday citing the Arab country’s lower fiscal strength, evident in its higher government debt and weaker debt affordability metrics than the ratings agency expected.

Moody's cut Oman's rating here to 'Ba2' from 'Ba1' and changed the outlook to stable.

On Feb. 23, Oman’s Sultan Haitham bin Tariq al-Said said the government would work to reduce public debt and restructure public institutions and companies to bolster the economy.

The small oil producing country has relied heavily on debt to offset a widening deficit caused by lower crude prices.

Moody’s said that last March it expected Oman’s government debt to peak under 60% of GDP by 2021, but the level was nearly reached already in 2019.

"Taking into account some, gradual, fiscal consolidation, Moody's now expects (Oman's) government debt to stabilize at around 67% of GDP in the next few years, contributing to a weaker fiscal strength assessment," the ratings agency said in a statement here.

Moody’s also said that Oman’s debt will continue to increase in the next two years, despite expectation that the government will begin implementing a significant medium-term fiscal adjustment program in the next few months.

Stable outlook reflects the agency’s assessment that Oman’s credit metrics are resilient to moderately negative fiscal and oil price shocks at the Ba2 rating level, Moody’s added. (Reporting by Devbrat Saha and Nishara Karuvalli Pathikkal in Bengaluru; Editing by Shailesh Kuber)