Lebanese Banks’ Standalone Baseline Credit Downgraded from Caa2 to “Ca”, on the Back of BDL’s Dec. 04th Circular

According to Moody’s rating agency, a Baseline Credit Assessment (BCA) of “Ca” instead of Caa2, is consistent with BDL’s recent December 04th Circular which basically instructed banks to pay 50% of the interest on existing foreign currency deposits in US dollars and the remaining in Lebanese pounds, effective Dec.05th for 6 months as per the central bank.         

Against this rationale, Moody’s downgraded the standalone BCA and Adjusted BCAs of Bank Audi, BLOM Bank, and Byblos Bank from Caa2 to “Ca”. As per the report issued Dec. 11th 2019, “[BDL’s recent action] constitutes a deposit default based on the agency’s own definitions.”

Moody’s statement also noted that “all other ratings and assessments of the three Lebanese banks are unaffected by this conclusion […]. The banks’ Caa3 foreign currency and Caa2 local currency deposit ratings remain on review for downgrade.”

Source: Moody’s Investors’ Service, Dec. 11 2019

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