Moody's downgrades Oman Power to A3 from A1
Six other Omani GRIs ratings also placed on review for downgrade
Moody's Investors Service, ("Moody's") has downgraded the long-term domestic and foreign currency issuer ratings of Oman Power & Water Procur. Co. (S.A.O.C.) (OPWP) to A3 from A1 and placed the ratings on review for further downgrade.
Moody's also placed six other Omani Government Related Issuers (GRIs) on review for downgrade including Dhofar Power Company SAOC, Majan Electricity Company SAOC, Muscat Electricity Distribution Company SAOC, Mazoon Electricity Company SAOC, Oman Electricity Transmission Company SAOC, Oman Telecommunications Company S.A.O.G., and Oman Power & Water Procurement Company (S.A.O.C.).
These actions follow last month’s downgrade of the Government of Oman's bond rating to A3 from A1 with review for further downgrade.
The rating action on the sovereign rating is driven by the high negative impact from low oil prices on the country's finances; its economic performance; and its current balance-of-payment positions.
The downgrade of OPWP's ratings to A3 from A1, follows Moody's rating action on the government of Oman given the close links between the two entities.
Given the legal and regulatory framework, in combination with the government's exclusive ownership and low business risk profile, OPWP's baseline credit assessment (BCA) of a3 remains on par with the credit risk assessment of the government of Oman.
OPWP's intrinsic strengths include the role the company plays in the country's power and water sector; provisioning of timely financial support from the government as stipulated by law; and exclusive government ownership of OPWP.
Rationale for placing OPWP and the other six issuers ratings on review for downgrade
The issuers' credit profiles have a strong degree of credit linkage to the Omani economy and government given assumed financial support and dependence as GRIs.
The review for downgrade on the issuers' A3 ratings will assess the credit implications of the conclusion of the review for downgrade on Oman's government bond rating; Omani government support and dependence assumptions; and the impact of a weakening economic environment on business profiles given continued low oil prices which could pressure Baseline Credit Assessments (BCA).
The rating agency will also factor planned actions that the government could take to finance its budget deficit and the consequential impact for the issuers.
The principal methodology used in rating Majan Electricity Company SAOC, Muscat Electricity Distribution Company SAOC, Mazoon Electricity Company SAOC, Oman Power & Water Procur. Co. (S.A.O.C.) and Dhofar Power Company SAOC was Regulated Electric and Gas Utilities published in December 2013. Other methodologies used include the Government-Related Issuers methodology published in October 2014.
The principal methodology used in rating Oman Electricity Transmission Company SAOC and Lamar Funding Limited was Regulated Electric and Gas Networks published in November 2014. Other methodologies used include the Government-Related Issuers methodology published in October 2014.
The principal methodology used in rating Oman Telecommunications Company S.A.O.G. was Global Telecommunications Industry published in December 2010. Other methodologies used include the Government-Related Issuers methodology published in October 2014.
Please see the Ratings Methodologies page on www.moodys.com for a copy of these methodologies.