S&P CUTS RATINGS OF OMANTEL, OPWP; OUTLOOKS KEPT STABLE

By: Gulam Ali Khan

MUSCAT: Standard & Poor’s (S&P) Ratings Services has lowered its ratings on two Oman-based companies, Oman Telecommunications Co (Omantel) and Oman Power and Water Procurement Co (OPWP). The outlooks on both companies are stable.

S&P said the rating actions reflect its view of Omantel and OPWP as government-related entities and stem from the recent downgrade of sovereign ratings on Oman.

On February 9, the ratings agency lowered its ratings on the sultanate to A-/A-2 from A/A-1, in view of the sharp fall in international oil prices. Oman was also assigned a stable outlook.

“As a result, we have reviewed our ratings on two Omani corporations in the telecommunications and utility sectors. We are therefore lowering our long-term rating on Omantel to BBB from BBB+ and affirming the A-2 short-term rating, and lowering our rating on OPWP to A- from A. The stable outlooks on both companies reflect that on the long-term sovereign credit ratings,” a statement issued by S&P said.

The global ratings agency said Omantel ratings reflect S&P’s continued assessment of Omantel’s standalone credit profile (SACP) at bbb, based on a ‘satisfactory’ business risk profile and a ‘minimal’ financial risk profile.

“And our opinion that there is a ‘moderately high’ likelihood that the government of Oman would provide timely and sufficient extraordinary support to Omantel in the event of financial distress. However, because of the lowering of the sovereign credit rating, we have reduced by one notch the uplift we incorporate into the long-term rating on Omantel for this support.”

S&P said the long-term rating on OPWP reflects its continued assessment of SACP at a- and its opinion that there is an ‘almost certain’ likelihood that the government of Oman would provide timely and sufficient extraordinary support to OPWP in the event of financial distress.

“We continue to regard OPWP as having a ‘satisfactory’ business risk profile and a ‘modest’ financial risk profile,” S&P said.

In December 2014, S&P had revised its outlook on both Omantel and OPWP to negative from stable, following a similar action on the sovereign in the same month.

SOURCE: MUSCAT DAILY