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BankMuscat holds seminar on Credit Ratings for
Corporates in Oman
Muscat. 01 May 2007. BankMuscat, nations
premier bank, held a seminar on the importance
of credit rating for companies in Oman. The
seminar featured Basel 2 and its effects on risk
capital allocation of the banks, methodologies
of credit ratings adopted by international
rating agencies and how credit rating would
benefit the corporate houses of Oman.
HE Darwish Ismail Al Balushi, Secretary General
Ministry of Finance was the chief guest for the
seminar titled ‘Credit Ratings for Corporates in
Oman’, and H.E. Hamud Bin Sangur bin Hashim Al-Zadjali,
Executive President, Central bank of Oman, H.E.
Yahya bin Said Al Jabri, Executive President,
Capital Market Authority, along with senior
management officials of corporate holdings in
Oman and regulatory bodies.
In his keynote address, HE Darwish Ismail Al
Balushi, Secretary General Ministry of Finance,
informed the attendees the importance of getting
an international rating from an agency, that
would give assurance to lenders about the
quality of the corporate they are looking to
lend in. He said the credibility of the rating
is a very important aspect to protect smaller
investors who would not otherwise have access to
information to make a decision. In his remarks
HE Darwish Ismail Al Balushi, Secretary General
Ministry of Finance, said”
While the banks in Oman are all rated there
are only a few non-banks that are currently
assessed by rating agencies. Central Bank of
Oman has taken a very progressive step by
adopting Basel 2 earlier and we are among the
very few countries in the world to have adopted
Basel 2 in 2007. We hope the implementation of
Basel 2 in Oman would be an additional
encouragement for the banks and the corporates
to have more corporate ratings carried out.”
In his welcome address, Mr. AbdulRazak Ali Issa,
Chief Executive, BankMuscat (SAOG) said,
“Looking at the wave of changes happening in
the GCC economies, we are confident that there
are lot of opportunities for the liquidity in
this region to be deployed. This calls for more
sophistication, transparency and stability,
which we already have. Getting an international
rating agency to assign a rating adds more
confidence in the prospective and existing
lender’s perspective.”
Mr. K. Gopakumar, GM-Wholesale Banking, in his
introductory presentation highlighted the
difference between Basel I and Basel II
implications as well as gave an introduction to
what is the purpose of credit rating and how it
can help the development of bond markets in
Oman. He added that getting a rating helps both
the banks as well as the corporates from a Basel
2 perspective as well as open a new avenue of
funding i.e. the capital markets for the
corporates. He mentioned that the Government
could use the capital markets to finance at
least some part of the projects and could set a
benchmark for the markets.
Presentations from two of world’s leading rating
agencies gave an overview of their methodologies
of rating, Basel 2 implications and the bond
issues by GCC corporates. The invitees got to
interact with speakers from Moody's Middle East
Limited and Fitch Ratings, both of who operate
from Dubai.
Philip Lotter, Vice President - Senior Credit
Officer, Moody's Middle East Limited, in his
presentation covered details on credit ratings
of corporate bonds in the GCC market and his
perception of credit issues specific to the GCC
corporates. Asked for his views on the seminar
and the topic, Philip Lotter said,
“The
seminar demonstrated the tremendous interest in
credit ratings that exists amongst Omani
corporates, and it can be expected that Oman's
capital market will develop and grow in similar
ways to the GCC as a whole.”
Stephen de Stadler, Senior Director, Head of
Business Development, Fitch Ratings, gave his
perspective on how credit rating is vital for
the market with the implementation of Basel II.
He also presented the general rating
methodologies adopted by the ratings agencies
for the corporate houses. Mr. De Stadler
appreciated BankMuscat’s market development
initiative to help local coporates understand
the credit rating process, which ultimately
would assist companies to obtain better access
to the debt capital markets, thereby broadening
their investor base.
Giving his outlook about the Oman economy, Mr.
De Stadler said,
“Fitch Ratings anticipates significant growth
in corporate, financial institution, project
finance and structured finance issuance in Oman
and the GCC over the next few years. We are
grateful for the opportunity and privileged to
be part of this vibrant and rapidly developing
region.”
The seminar was much appreciated by all
attendees who belonged to government and private
sector companies of Oman. They expressed
interest in ratings and had questions pertaining
to the approach of the international rating
agencies, different kinds of ratings, fee
structure and regulations on credit ratings.
The market development initiative by BankMuscat
is to help the bank’s customers get information
about global trends in capital markets.
BankMuscat is amongst the pioneers in getting
rated by a credit rating agency in Oman. The
Bank started the rating process in 1993 by
Capital Intelligence and is currently rated by
Moody’s, Fitch, S &P and Capital Intelligence.
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