19 May 2016
MUSCAT: Moody's Investors Service (Moody's) concluded rating reviews on six Omani Government-related Issuers (GRIs).
Moody's has downgraded Oman Power & Water Procurement Co (SAOC) (OPWP) and Oman Electricity Transmission Company SAOC (OETC) by one notch.
Moody's has also downgraded Majan Electricity Company SAOC (MJEC), Mazoon Electricity Company SAOC (MZEC), Muscat Electricity Distribution Company SAOC (MEDC) and Dhofar Power Company SAOC (DPC) by two notches.
The outlook on all ratings is stable. The rating actions conclude the review for downgrade which Moody's initiated on March 1, 2016. It follows the downgrade of the sovereign rating of Oman to Baa1 from A3 and the assignment of a stable outlook on May 14, 2016, the agency said in a statement.
The downgrade of OPWP's ratings to Baa1 from A3 and the assignment of a stable outlook, follows Moody's rating action on the government of Oman given the close links between the two entities, Moody's said.
Downgrading OETC's issuer rating to Baa1 and assigning a stable outlook aligns the company's corporate ratings with its baseline credit assessment (BCA) and with the government of Oman's rating.
In downgrading MJEC's, MEDC's and MZEC's issuer ratings to Baa2 and assigning a stable outlook, the companies' ratings are now aligned with their BCAs and are one notch below the government of Oman's rating. The ratings continue to benefit from a high level of support from the government of Oman, it said.
In downgrading DPC's issuer rating to Baa2 and assigning a stable outlook, the company's rating is now one notch below the government of Oman's rating and benefits from one notch of exceptional support assumption. The baa3 BCA, which is one-notch below the other DisCos, reflects (1) that DPC has the highest funding requirements (on a relative basis) and the longest projected period before turning free cash flow positive; and (2) its smaller scale relative to MJEC, MZEC and MEDC which leaves DPC's financial profile more weakly positioned. The baa3 BCA also takes into account that DPC, unlike the other DisCos, currently does not legally benefit from the credit-enhancing mechanisms enshrined in the Sector Law as it is not wholly owned by the government.
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