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Fitch cuts ratings of OETC, Omantel and Mazoon

25 Aug 2020

Fitch Ratings on Tuesday downgraded Oman Electricity Transmission Company’s (OETC), Mazoon Electricity Company’s (Mazoon) and Omantel’s long-term foreign-currency issuer default ratings (IDR) to ‘BB-’ from ‘BB’.

Fitch has also downgraded OETC’s and Mazoon’s long-term local-currency IDRs to ‘BB-’ from ‘BB’. The outlooks on all the issuer default ratings are negative, Fitch said in a statement.

Fitch said its rating actions on OETC, Omantel and Mazoon follow the recent downgrade of Oman’s long-term foreign-and local-currency IDRs.

The ratings agency said that OETC’s, Mazoon’s and Omantel’s ratings are assessed using Fitch’s government-related entities (GRE) rating criteria. ‘Their standalone credit profiles (SCP) are higher than the Oman sovereign rating of ‘BB-’. We do not envisage them to be rated higher than the sovereign’s, given the moderate-to-strong legal and operational linkages between the government and each of these companies. Changes to the sovereign rating would therefore likely be reflected in the ratings of OETC, Mazoon and Omantel,’ Fitch said.

Last week, Fitch had lowered Oman’s long-term foreign-currency issuer default rating to 

‘BB-’ from ‘BB’ and has kept its outlook on Oman rating ‘negative’. Fitch said the rating downgrade and negative outlook reflect the continued erosion of Oman’s fiscal and external balance sheets, which have accelerated amid low oil prices and the coronavirus shock, despite some progress on underlying fiscal consolidation.

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