Moody’s takes rating actions on Omani banks

Muscat - 

Moody’s Investors Service has lowered the long-term local and foreign currency deposit ratings of four Omani banks: Bank Muscat, HSBC Bank Oman, BankDhofar and National Bank of Oman (NBO).

The ratings agency downgraded the long-term local currency deposit ratings of these four banks to Ba1 from Baa3, while it lowered their long-term foreign currency deposit ratings to Ba2 from Baa3 due to the new sovereign ceiling.

‘These rating actions, which follow Moody’s downgrade of the government of Oman issuer rating to Ba1 with a negative outlook from Baa3, reflect the Omani government’s weakening capacity to support the local banks as well as the weakening operating environment in the country’, Moody’s said in a statement.

The ratings agency has maintained the outlook on Bank Muscat’s, HSBC Bank Oman’s, BankDhofar’s and NBO’s long-term deposit ratings at negative.

Moody’s has affirmed the long-term local currency deposit rating of three banks: Sohar International, Oman Arab Bank (OAB) and Bank Nizwa.

While long-term local currency deposit ratings of Sohar International and OAB are affirmed at Ba1, Moody’s lowered the long-term foreign currency deposit ratings of these two banks to Ba2 from Ba1 due to the new sovereign ceiling. At the same time, the rating agency maintained the negative outlook on Sohar International’s and OAB’s long-term deposit ratings.

Moody’s has affirmed Bank Nizwa’s long-term local and foreign currency deposit ratings at Ba2, while maintaining the negative outlook on the bank’s long-term deposit ratings.

The ratings agency said that the upwards pressure on Omani banks’ ratings is limited given the negative outlook on their ratings. ‘A stabilisation in the Omani government’s issuer rating outlook could lead to a stabilisation in the banks’ rating outlooks’, it added.

Moody’s on Wednesday lowered the long-term issuer and senior unsecured bond ratings of the government of Oman to Ba1 from Baa3. Moody’s said the sovereign action reflects its expectation that, in an environment of moderate oil prices, the Oman government’s fiscal metrics will weaken as the scope of fiscal consolidation is more significantly constrained than previously assessed.

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