After downgrading Pakistan’s rating, Moody’s has now downgraded the ratings of five banks.
Moody’s Investors Service has downgraded the long-term deposit rating and long-term foreign currency counter party risk rating of these Pakistani banks from ‘B3’ to ‘CAA1’.
Moody’s has downgraded the deposit rating outlook of all the five banks to negative.
Moody’s Investors Service downgrades the long-term deposit ratings of five Pakistani banks i.e. Allied Bank Limited (ABL), Habib Bank Ltd (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP) and United Bank Ltd (UBL) from B3 to Caa1.
It also lowered the banks’ long-term foreign currency counter party risk ratings (CRRs) from B3 to Caa1.
In its statement, Moody’s says the ratings reflect the government’s reduced capacity to support the banks. Which affects the banks whose ratings benefit from government support, namely NBP and HBL.
The high credit linkages between the banks’ balance sheets and sovereign credit risk and the lowering of Pakistan’s foreign currency ceiling to Caa1, which has affected the foreign currency CRRs of all rated banks.