Moody's upgrades foreign currency deposit ratings of Bank Muscat and Oman Arab Bank

The outlook on these ratings has also been changed, from positive to stable. The Bank Financial Strength Ratings (BFSRs) of the affected banks remain unchanged. The rating for the foreign currency bonds of Bank Muscat also remains unchanged, at A1.

These actions were taken after Moody's upgraded the long- and short-term A3/Prime-2 ceiling for foreign currency deposit ratings (FCDRs) to
A2/Prime-1, the long-term local and foreign currency government bond ratings to A2 from A3, and the ceiling for foreign currency debt in Oman to Aa3 from A1.

According to Moody's rating methodology, the deposit ratings are based on BM's Baseline Credit Assessment of Baa1, OAB's Baseline Credit Assessment of Baa2, the local currency deposit ceiling for Oman of Aa2, and Moody's assessment of the likelihood of government support, which in the case of BM and OAB is assessed as very high.

Moody's notes that, going forward, any upgrade to the foreign currency deposit ceiling for Oman would not automatically lead to an upgrade in
the foreign currency deposit ratings in the case of Oman Arab Bank, as its FCDRs are no longer constrained by the country ceiling. In the case
of Bank Muscat, the FCDRs remain constrained by the ceiling for such deposits in Oman, which means that an upgrade of Oman's foreign currency
deposit ratings would be likely to lead to an upgrade of the respective ratings for Bank Muscat.

Bank Muscat and Oman Arab Bank are headquartered in Oman and reported total assets at 31 March 2007 of OMR3.270 million (USD 8.473 billion) and OMR608 million (USD 1.575 billion), respectively.