WASHINGTON D.C.: Moody’s Investor’s Service on Tuesday downgraded the long-term deposit ratings of five Pakistani banks including Allied Bank Limited, Habib Bank Ltd, MCB Bank Limited, National Bank of Pakistan, and United Bank Ltd which have been downgraded from B3 to Caa1.
The rating agency has also lowered the banks’ long-term foreign currency counterparty risk ratings (CRRs) from B3 to Caa1.
Earlier on October 6, Pakistan’s local and foreign currency and senior unsecured debt ratings were downgraded from B3 to Caa1.
“The outlook on all banks’ deposit ratings remains negative,” Moody’s said in a statement on their website.
The credit rating company explained that the government’s lack of capacity to support banks, especially NBP and HBL which have a higher credit linkage with the government, has impacted the banks’ ratings. This is the first time Moody’s has slapped a C rating on Pakistan in 7 years.
“As a result, NBP and HBL’s deposit ratings no longer incorporate a government support uplift.”
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Hello,
It wouldn’t matter even if Moody downgrades it further. It wouldn’t make any difference (apart from slight dip in stocks). Pakistan is a cash economy, these banks are funded locally or either via worker remittances or by our new gen freelancers. We are not an international economy neither any of our banks. Over 90% of the customer base is Pakistani who don’t even know the meaning of the term “Moody’s” – Majority businesses are schools, realestate developers, Pakistani manufacturers, wholesalers, money changers etc. As for their lending to SBP, I am sure you are aware Pakistan will soon be putting their assets off- watch how these banks move.
Apart from Moody, becoming Moody-it won’t do anything to local banks. For SBP yes it will impact when we would try to raise funds from Debt market, it would impact. However, Pakistan will slowly be switching from Debt market into larger IMF program , WB, AIIB and Friendly countries. IMF will be with us for 5-7 years, and we would be hearing the name “Gita Gopinath” for some time.
J.K
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