Fitch Ratings on Dec. 15 downgraded the long-term foreign-currency issuer default ratings of a number of Oman-based banks, primarily reflecting a change in the agency's assessment of the country's ability to support domestic lenders.
The long-term foreign-currency issuer default ratings of Bank Dhofar SAOG, National Bank of Oman SAOG, Ahli Bank SAOG and Bank Sohar SAOG were downgraded to BBB- from BBB, while that of Bank Muscat SAOG was lowered to BBB from BBB+. Ahli Bank's long-term local-currency issuer default rating was also downgraded to BBB- from BBB.
HSBC Bank Oman SAOG's long-term foreign-currency issuer default rating was downgraded to A- from A, reflecting Fitch's perception of a rise in Omani transfer and convertibility risk, which led to the cap on parent HSBC Holdings Plc's ability to support the unit being revised to A- from A.
The outlook on all six Omani banks is stable.
The support rating floors on Bank Dhofar, National Bank of Oman, Ahli Bank and Bank Sohar were lowered to BBB- from BBB, while that on Bank Muscat was lowered to BBB from BBB+, with the one-notch differential over the other banks reflecting its greater systemic importance as Oman's largest bank.
The support rating floor revisions reflect Fitch's belief that although the Omani sovereign's propensity to provide support to banks has not changed, its ability to do so has weakened as a result of a widening government budget deficit attributable to revenue pressure from low oil prices.
Fitch affirmed HSBC Bank Oman's short-term foreign-currency issuer default rating at F1. The other banks' short-term foreign-currency issuer default ratings were downgraded to F3 from F2, as was Ahli Bank's short-term local-currency issuer default rating.