Maintenance of the rating of Lebanon to B2 by Moody’s – Le Commerce du Levant

In a statement released Friday, July 15, Moody’s US rating agency maintains the rating of Lebanon to “B2″ with “negative” outlook.
A decision that the US Agency justified by the low growth of the Lebanese GDP (1.7% projected) in 2016 and a regional deteriorating political context.

Moody’s also put in guard Lebanese banks for their high exposure to sovereign debt.

“We believe that the increasing exposure of Lebanese banks to sovereign debt is the main risk to them,” said Alexios Philippides, assistant vice president of the American agency in the press release announcing the report.

The US Agency believes that they hold more government bonds binds their creditworthiness to that of the government, which relies on them to fund its deficits and pay for the service its debt.

“In March, the amount of bonds issued by the State and by the Banque du Liban (BDL), which are held by Lebanese banks, amounted to 86 million dollars, representing 46% of total assets, “further notes Alexios Philippides.

in this context, banks will face increasing pressure on their asset quality and will include maintaining credit provisions doubtful at a high level (1 to 1.5% of the gross annual amount of their loans).

Moody’s also noted that bad debts should rise to 5% of total loans (against 4% end 2015).

Still, the level of own funds banks should remain stable in 2016 (9% of total assets), said the rating agency that considers the profitability of banks will further to an efficient level, thanks to their results abroad and rate stability interest.

Moody’s concluded his report by recalling that the Lebanese banking sector can always rely on high levels of liquidity and a sustained growth in deposits, which however is also expected to slow, partly because of lower transfers from the Gulf countries.

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