ISLAMABAD – Moody’s Investors Service has downgraded the long-term deposit ratings of five Pakistani banks to Caa3 from Caa1.
The noted rating agency downgraded long-term foreign currency Counterparty Risk Ratings of five commercial banks including Allied Bank Limited (ABL), Habib Bank Ltd (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP), and United Bank Ltd. (UBL).
The Baseline Credit Assessments (BCAs) of these banks were cut to Caa3 from Caa1, and the agency reduced their local currency long-term CRRs to Caa2 from B3, as well as their long-term Counterparty Risk Assessments to Caa2(cr) from B3(cr).
Moody’s changed bank’s outlook to stable from negative.
Last month, the Investors Service downgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa3 from Caa1, cutting the rating for the senior unsecured MTN programme to (P) Caa3 from (P)Caa1. Concurrently, it has also changed the outlook to stable from negative.
Moody’s maintained that the ongoing economic crisis in South Asian nations is likely to have an adverse trickle-down effect on banks. With record inflation and the central bank’s benchmark policy rate at 20%, the capacity of borrowers to repay loans taken from banks has been dented.
