Muscat – Moody’s on Tuesday affirmed ratings of Sohar International positive, but downgraded the ratings of HSBC Oman.

‘Sohar International Bank SAOG’s (Sohar International) Ba2/NP long- and short-term deposit ratings, ba3 Baseline Credit Assessment (BCA) and Adjusted BCA, and maintained the outlook on the bank’s long-term deposit ratings at positive, in line with the positive outlook assigned to the Government of Oman’s Ba2 issuer rating,’ Moody’s Investors Service stated.

‘Concurrently, the rating agency affirmed HSBC Bank Oman SAOG’s (HBON) ba2 BCA, downgraded its Adjusted BCA to ba2 from ba1 and its long-term deposit ratings to Ba2 from Ba1, and affirmed its NP short-term deposit ratings,’ it added.

Moody’s changed the outlook on HBON’s long-term deposit ratings to positive from developing, in line with the positive outlook assigned to the Government of Oman’s Ba2 issuer rating.

The latest rating action follows the official public announcement on June 21 that the banks’ shareholders have approved the merger of the two entities, and this is expected to be completed by August 17.

The banks had received transaction approval from Oman’s Central Bank in February this year.

Upon completion, Sohar International will be the surviving entity and acquire all HBON’s liabilities and assets and Moody’s will withdraw all the ratings of HBON.

Upwards pressure on the long-term deposit ratings of the banks could be triggered by a higher sovereign rating, given they are positioned at the same level of the sovereign rating.

The positive outlook on the banks’ long-term deposit ratings indicates a downgrade in the near term is less likely.

However, downward pressure on the banks’ ratings could develop through a deterioration in the sovereign’s credit profile, or a material deterioration in the banks’ solvency and liquidity.