Moody’s lowers Omani banks

Moody's Investors Service said it concluded its review for downgrade on the ratings of four Omani banks initiated on March 3 by downgrading the long-term deposit ratings of BankMuscat SAOG to Baa1 from A3, Oman Arab Bank to Baa2 from Baa1 and Bank Dhofar SAOG to Baa2 from Baa1 and confirming the Baa1 long-term deposit rating of HSBC Bank Oman SAOG.

The agency also assigned a negative outlook to Bank Dhofar's long-term ratings while the ratings of the three other banks carry a stable outlook.

In addition, Moody's affirmed the Ba3 corporate family rating and the B1 issuer rating of Al Omaniya Financial Services SAOG. The ratings continue to carry a negative outlook.

These actions follow the agency’s May 14 downgrade of Oman's government issuer rating to Baa1 (stable) from A3, concluding the review for downgrade initiated on Feb. 26. The sovereign action reflects Moody's view that a protracted period of low oil prices will negatively affect Oman's sovereign credit profile beyond the previously anticipated level, despite the sizable fiscal consolidation efforts undertaken by the government.

The rating downgrades of three Omani banks reflect the reduced capacity of the Omani government to provide support to the banks in case of need, as indicated by the downgrade of the government's rating. However, Moody's said its assessment of the government's willingness to support the banks in case of need remains unchanged.

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