S&P Upgrades Oman’s Credit Rating with 'Stable Outlook'

A gas production field in the Sultanate of Oman. (Reuters)
A gas production field in the Sultanate of Oman. (Reuters)
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S&P Upgrades Oman’s Credit Rating with 'Stable Outlook'

A gas production field in the Sultanate of Oman. (Reuters)
A gas production field in the Sultanate of Oman. (Reuters)

Global credit rating agency Standard & Poor’s (S&P) upgraded Oman’s credit rating to ‘BBB-’ with a stable outlook, hoping the country’s public finances will continue to strengthen.
“The outlook on the long-term ratings is stable,” the agency said.
The stable outlook balances the potential benefits of the government's fiscal and economic reform program against the economy's structural susceptibility to adverse oil price shocks.
S&P also noted that Oman’s fiscal position remains highly dependent on oil price movements, but resilience against shocks has strengthened.
Oil prices settled higher on Friday but fell on the week as investors weighed expectations for higher global supply against fresh stimulus from top crude importer China.
Brent crude futures settled up 38 cents, or 0.53%, at $71.89 per barrel. Front-month US West Texas Intermediate crude futures settled up 51 cents, or 0.75%, at $68.18.
On a weekly basis, Brent settled down around 3%, while WTI fell by around 5%.
In early May, the International Monetary Fund (IMF) said Oman’s near- to medium-term outlook is favorable and risks to the outlook are broadly balanced.
It expressed hope that a decline in oil prices and economic reforms would continue in the medium term.
On Saturday, S&P expressed optimism it could raise Oman’s ratings over the next two years if reforms lead to steady growth in Oman's GDP per capita supported by continued momentum in non-oil growth.
It then expected the government's fiscal and economic reform momentum will continue over 2024-2027 on condition of reducing external debt levels and accumulating liquid assets.
Last week, the Central Bank of Oman (CBO) reduced its repo rate for local banks by 50 basis points, bringing it down to 5.5% in line with other Gulf central banks’ decisions to cut their key interest rates after the Federal Reserve decreased US rates by half a percentage point.
S&P said it anticipates that the CBO will continue following the US Federal Reserve's interest rate policy.
The agency added, “We expect Oman will maintain its currency peg, supported by its accumulated government external assets of about 30% of GDP.”

 



Saudi Arabia's Real Estate Sector Sees Positive Growth Driven by Changing Economic Factors

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)
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Saudi Arabia's Real Estate Sector Sees Positive Growth Driven by Changing Economic Factors

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)

Saudi Arabia's real estate sector is experiencing positive growth driven by significant social and economic changes in the Kingdom, according to a recent report by S&P Global.

“Significant social and economic changes are making the Kingdom a major target market for international brands in the fashion, luxury, and food and beverage segments. As a result, demand for premium retail space is increasing,” the report said.

However, S&P Global noted that Saudi Arabia’s retail landscape is expected to face several challenges, including oversupply.

“Saudi retail real estate could face a supply wall. Knight Frank forecasts Riyadh’s supply to grow by 50% by 2027 and Jeddah’s to grow 75% over the same period. This could lead to rental discounts, revenue-sharing lease models, and other incentives to maintain occupancies,” said S&P Global.

In a broader context, the report cautioned that oversupply in the oil market will continue to outweigh slow oil demand growth through 2025 and beyond, and this could negatively impact the level of investment and spending in the region, particularly that Saudi Arabia and its spending on Vision 2030 remain highly dependent on oil prices.

In the Emirates, S&P projected that Dubai and Abu Dhabi are experiencing resilient demand and modest rental growth for retail real estate, with prime super-regional malls continuing to dominate the market, which has led to mall owners expanding their offerings.

Dubai’s commercial real estate sector is booming, as vacancy rates remain at an all-time low of 8.6%, and demand for grade-A offices drives up rentals, S&P Global said.

“Supportive regulations for businesses, dynamic economic environment, and the low tax regime sustains the city’s attractiveness for global businesses and family offices,” said the report.

Despite the positive outlook, the report mentioned challenges linked to the escalated and prolonged geopolitical conflict could lead to an expatriate exodus from the region, severely impacting real estate prices and rents.

Also, it said consumer trends are shifting towards innovative shopping experiences and new brands, which may pose challenges to traditional shopping malls.

The report also noted that while the luxury goods sector benefits from sustained high-end spending, broader consumer budgets are strained by economic uncertainty, high interest rates, and inflation.