May 14, 2017 / 5:52 AM / 3 months ago

MIDEAST STOCKS-IMF deal may buoy Egypt, downgrade weigh on Oman

DUBAI, May 14 (Reuters) - Egypt's stock market may benefit on Sunday from news that the International Monetary Fund reached a staff-level agreement with Cairo on a second loan instalment, while a downgrade of Oman's debt to junk status may weigh moderately on that market.

The IMF said on Friday it had agreed with Egypt to make available about $1.25 billion. It added that the finance ministry had drafted a "very strong budget" which if enacted by parliament would put public debt on a "clearly declining path to sustainable levels".

Agreement had been expected, but it came sooner than some analysts had expected, and the IMF's positive tone may encourage investors.

Meanwhile, Standard & Poor's cut Oman's credit rating to junk status on Friday, saying low oil prices had eroded the country's external reserves to the point they could no longer offset the threat of low oil prices.

The downgrade was not unexpected, and the other two major ratings agencies have higher assessments of Oman than S&P. But the downgrade could affect Omani bank stocks slightly because the banks may now face higher costs in financing themselves.

Global markets ended last week with a moderately positive tone; MSCI's gauge of stock markets around the globe rose 0.12 percent for the day on Friday and 0.094 percent for the week, the fourth straight weekly increase. Brent oil futures stood at $50.89 per barrel. (Reporting by Andrew Torchia)

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