Potential assistance for Oman from wealthier neighbors in the Gulf may not be quite the turning point it was for Bahrain two years ago.
Oman’s bondholders are hoping it obtains a similar lifeline, and credit assessors from Fitch Ratings to S&P Global Ratings see that as a possibility. The sultanate discussed the option with other Gulf states, people with knowledge of the matter told Bloomberg in June.
But the size of any aid package will likely “be calibrated to facilitate, but not meaningfully replace, debt market funding,” Fitch said this week as it downgraded Oman’s sovereign rating deeper into junk. The sultanate’s dollar-denominated bonds have lost 1.6% this year, the worst performer in the region.
That raises the stakes for Oman, which has lagged behind most peers in implementing fiscal reforms despite dwindling reserves and a budget deficit Fitch estimates could reach 20% of gross domestic product this year.
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