On November 15th 2019 S&P issued a recent report in which it lowered its long-term credit ratings on Audi Bank, BLOM Bank, and Bank Med from “B-” to “CCC”. The credit agency also lowered its short-term issuer credit ratings on Bank Audi and Bank Med from “B” to “C”. S&P’s ratings are on Creditwatch and are therefore prone to be lowered or affirmed in the next 3 months, depending on the evolution of consumer confidence.
As per the report, the main rationale for the downgrade are the bank’s “rising liquidity pressures” as a result of the recent political developments and social unrest which pushed towards prolonged bank shut downs and some bank restrictions on client transactions.
S&P also highlighted that the central bank “has offered liquidity facilities in the form of short-term US dollar loans at a hefty 20% interest”. Nonetheless, the report finds BDL’s liquidity support to banks may remain constrained, given BDL’s financing of the Lebanese government.
It’s worthy to note that the downgrade by S&P followed last week’s downgrade of Lebanon’s credit ratings by Moody’s to Caa2.
Source: S&P, Nov. 2019