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Oman was upgraded to BB+ from BB by Fitch, bringing it just a notch away from IG-status. This comes on the back of its “use of high oil revenues to pay down debt and spread its maturity”. They also expect the government not to go back on its recent fiscal consolidation measures. Oman’s restraint in spending helps reduce external risks and an increase in Fitch’s forecast for oil prices further adds to its credit profile. Regarding its external position, Oman has been pre-paying some of its debt and its falling external debt has helped its liquidity, adding to positive contribution of SOEs. Fitch expects Oman’s total net external debt to stabilize at 26-28% of GDP through 2023-25, well above the BB median. Fitch also sees Oman’s net foreign assets returning to a positive position in 2023 – this comes after it fell to -9% of GDP in 2020 vs. from 53% in 2014. Oman is expected to continue seeing a budget surplus of 4.1% of GDP in 2023, 2.4% in 2024 and 1% in 2025. The narrowing in surpluses is due to forecasts of a decrease in Brent prices from $80 to $75/bbl through 2025. Fitch also notes that Oman could see a benefit from large scale investments in the green hydrogen sector from 2025, further helping growth.
Oman’s dollar bonds were trading stable with its 5.625% 2028s at 97.95, yielding 6.17%.