Oman’s energy firm revises loan terms to save $100m

Oman News Agency

State-owned Energy Development Oman (EDO) has renegotiated the terms of its $2.5 billion loan, resulting in cost savings of $100 million in interest payments.

The move is part of the government’s initiative to reduce interest costs across state-related entities, Oman News Agency reported.

EDO’s borrowing cost is primarily based on the credit rating of Oman.

In 2022, the surge in oil and gas prices and the government’s efforts to ensure financial sustainability led to two ratings agencies, Fitch Ratings and Standard and Poor’s (S&P), raising their rating assessments. This improvement in the credit outlook contributed to increasing the investment attractiveness of the Gulf nation.

S&P Global Ratings revised its outlook on Oman to positive from stable while affirming its rating at ‘BB’.

Mazin Al Lamki, chief executive of EDO, said that S&P’s latest credit rating upgrade reflects the government’s prudent fiscal policies and ongoing economic reform efforts.

“As a result of this upgrade, we expect to see increased investor confidence and interest in Oman, which will, in turn, support economic growth,” he said, adding the rating will allow EDO access to more favorable borrowing terms.

Thanks to the improved credit profile, the state entity renegotiated its seven-year $2.5 billion loan, issued in August 2021 and signed initially at a fixed credit margin of 2.95 percent.

EDO asked the bank group to voluntarily amend the existing loan to a lower margin of 2.05 percent in coordination with the debt management office at the finance ministry, the report said.