Moody's Investors Service has confirmed the long-term foreign currency bond ratings of BLOM Bank and Byblos Bank at B1 with a negative outlook. The rating action reflects the change in Moody's longstanding approach to rating the foreign currency bonds of debt issuers, which was announced in June 2001.
Moody's new approach now permits the ratings of bonds and notes of some issuers to pierce their respective country ceilings. The change in country ceiling policy does not affect foreign currency bank deposit ratings, which remain for Lebanese banks at B2/NP with a negative outlook. At B1, the bonds issued by the two Lebanese banks are rated one notch higher than the B2 foreign currency sovereign ceiling for bonds in Lebanon.
Moody's said that the factors considered in the rating reviews included the creditworthiness of the issuer (including external support mechanisms), the probability that there would not be a generalized moratorium in the event of default by the government on its own foreign currency obligations and the special circumstances of the borrower in terms of access to foreign exchange.
"The revised country ceiling policy represents a shift in Moody's analytic approach in response to recent experience with respect to transfer risk. Over the past few years the behavior of governments in default has suggested that they may now have good reasons to allow foreign currency payments on some favored classes of obligors or obligations, such as bonds and notes, especially if an entity's default would inflict substantial damage on the country's economy," a Moody's press release read.
Moody's noted that Banque Audi's $100 million 9.375 percent senior bond, which was placed on review last year, had matured in November 2001 and therefore the rating on this bond was withdrawn.
Issuers and Ratings Affected include BLOM Bank’s long-term $75 million subordinated euro-bond due 2005 confirmed at B1, with negative outlook, Byblos Bank’s long-term $100 million Global Deposit Notes due 2002 confirmed at B1, with negative outlook. Moody's has also assigned a rating of B1 with negative outlook to the forthcoming issue of $100 million subordinated notes by Byblos due 2012. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
