Oman was cut to junk by S&P Global Ratings, which said a drop in crude could hamper exports from the largest Arab oil producer outside OPEC and jeopardize its finances.
Oman was cut to junk by S&P Global Ratings, which said a drop in crude could hamper exports from the largest Arab oil producer outside OPEC and jeopardize its finances. S&P lowered the Gulf state’s sovereign debt long-term rating to BB+, one level below investment grade, from BBB- and changed the outlook to negative, the New York-based firm said in a statement Friday.
“The negative outlook reflects the potential for Oman’s income level to weaken and for its fiscal and external positions to deteriorate,” S&P said in a statement. The slump in oil prices since 2014 has put pressure on the finances of the sultanate, forcing it to join other Gulf countries in tapping international debt markets to plug budget shortfalls.
Oman, which has the third-lowest investment grade rating at Moody’s Investors Service, raised $5 billion through a three-part sale of dollar bonds earlier this year. S&P estimates Oman’s net external asset position has fallen to 30 percent of current account receipts in 2017 from 60 percent last year. The country will post a budget deficit of 10.3 percent of gross domestic product in 2017, according to the median estimate of eight economists on Bloomberg.