Mubasher: Moody’s Investors Service has assigned a rating of ‘Baa1’ to the US dollar certificates issued by Oman Sovereign Sukuk which is a special purpose vehicle incorporated in Oman and wholly owned by its government, according to a report issued on 14 July.
“Moody's notes that its Sukuk rating does not express an opinion on the structure's compliance with Shari'ah law, the report clarified.
Despite Moody's expectations for Oman’s debt to rise to about 30% of the gross domestic product (GDP) by 2017 from less than 5% at the onset of the oil price shock, the country's fiscal buffers which Moody's estimates at around 85% of GDP in 2015 will provide support through the process of fiscal and external adjustment, the report said.
“The stable outlook on the government bond rating reflects the anticipated resilience of the Government of Oman's rating over the next 12 to 18 months and signals that upward and downward pressures are balanced,” it added.
Moody’s said that the upward pressure on the rating would stem from faster-than-currently expected progress on containing Oman’s fiscal deficits and debt as well as diversifying the economy and government finances away from oil.
Meanwhile, the downward rating pressure would emerge if the Omani government finances weaken faster than Moody's baseline scenario currently expects, the report noted, adding “Greater-than-expected weakening in the balance of payments would also be credit-negative.”
