DUBAI Nov 21 Credit rating agency Requirement
Poors has actually downgraded Omans sovereign financial obligation in a sign of growing
pressure on the financial resources of some Gulf Arab oil exporters.We task that a duration of continual low oil rates will hinder Omans monetary and external balances more than we had formerly anticipated, SP said late on Friday as it reduced its long-term regional and international currency ratings to BBB-plus from A-minus. SP kept a negative outlook for Oman, citing risks over the next 2
years. We might examine Oman as having insufficient fiscal and external strength to balance out the concentration of its economy in the hydrocarbons sector and the resulting volatility.Moodys Investors Service has an A-1 score for Oman, 3 notches above SP, with an unfavorable outlook.
It alerted in August that Omans high levels of government spending would not be sustainable over a multi-year period of low oil costs. SP took its action after Omani finance ministry data launched today showed the federal government posted a spending plan deficit of 2.93 billion rials ($7.62 billion)in the
very first 9 months of 2015, versus a 136.1 million rial surplus a year earlier.The Omani federal governments original 2015 budget plan envisaged expense of 14.1 billion rials and a deficit of 2.5 billion rials, presuming a typical oil cost of $75 per barrel.
Brent crude is now trading below$45. Oman has minimal overseas debt
and the federal government stays able to offer rial bonds without difficulty to
local banks and investors, so the downgrade is likely making little difference to Omani financial resources or markets
in the meantime. But it could cost Oman if a protracted domestic loaning program ultimately squeezes funds readily available in the domestic banking system, compeling the federal government to raise money abroad.Pressure has grown in the
previous few months on the credit scores of Gulf
nations whose finances are viewed as reasonably weak.
They face the very same problems as Oman: a plunge in oil profits,
political and economic obstacles to cutting expenditure,
and problem in enhancing non-oil profits through steps such as taxes. Last month SP cut its scores for Saudi Arabias long-term international and regional currency sovereign credit by one notch to A-plus/A -1. High yields at a$1.5 billion bond sale by the Bahraini
federal government this week showed many financiers are pricing in an expected downgrade of Bahrain, presently ranked BBB-minus by Fitch Ratings.By contrast, the three other rich oil-exporting countries of the Gulf- the United Arab Emirates, Kuwait and Qatar-have much larger financial reserves relative to their populations and face no impending danger of downgrade.The scores agencies preserve steady outlooks for them and credit
default swaps markets, used to guarantee against a debt default, have actually hardly moved in the last couple of months, showing financiers do not believe that will change.( Reporting by Andrew Torchia; Modifying by Stephen Powell)