Moody’s Investors Service has concluded its review on the ratings of eight Gulf banks in the UAE, Qatar and Bahrain.
Moody’s confirmed the long-term ratings of five UAE banks. The short-term issuer ratings of one bank were also confirmed. In addition, all the banks’ ratings have been placed on negative outlook.
The action concludes Moody’s review for downgrade of five UAE banks’ ratings that was initiated in March 2016 and follows Moody’s confirmation of UAE government issuer rating at Aa2 on 14 May 2016.
The negative outlook on the sovereign rating reflects the ongoing negative pressure of lower oil prices on the UAE’s fiscal position and economic strength.
Moody’s decision to confirm the ratings of five UAE banks is underpinned by the continued capacity and willingness of the government to provide support to the banks in times of stress as indicated by the confirmation of the Aa2 rating.
The negative outlook mirrors the negative outlook on the sovereign rating and captures UAE’s fiscal pressures, which may weaken its capacity to provide support over time.
The affected entities are National Bank of Abu Dhabi (NBAD), Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB), Al Hilal Bank (AHB) and Abu Dhabi Islamic Bank (ADIB).
Qatar
Moody’s has also concluded its review for downgrade on the ratings of two Qatari banks initiated in March 2016. Moody’s has confirmed the long-term deposit ratings of Qatar National Bank at Aa3 with a negative outlook, and downgraded the long-term deposit ratings of The Commercial Bank to A2 from A1 with a stable outlook.
The rating actions follow Moody’s confirmation of Qatar’s government issuer rating on 14 May 2016 at Aa2 with a negative outlook, which concluded the review for downgrade of the sovereign rating that was initiated in March 2016. The sovereign action reflects Moody’s view that despite the negative effect from a protracted period of low oil prices on the country’s economy, government finances and external strength, the sovereign’s overall credit profile remains consistent with a Aa2 rating.
Bahrain
Moody’s downgraded Gulf International Bank‘s senior unsecured debt ratings to Baa1 from A3, the provisional subordinated debt rating to (P)Baa2 from (P)Baa1. All other ratings were confirmed. The outlook on the bank’s senior unsecured debt ratings and long-term deposit ratings was changed to negative. This rating action concludes the review initiated in March 2016.
The downgrade of the bank’s debt ratings reflects the weakened capacity of the government of Saudi Arabia, the bank’s main shareholder, to support GIB in case of need and follows the downgrade of the government of Saudi Arabia issuer rating to A1 from Aa3.
Review on three UAE GRIs
Separately, Moody’s has taken ratings actions on International Petroleum Investment Company (IPIC), Mubadala Development Company (Mubadala) and Emirates Telecommunications Group (Etisalat) as well as on the ratings of the IPIC-guaranteed 5.99% $1.75 billion notes issued by 1MDB Energy Limited (1MDBEL).
The ratings of IPIC, Mubadala and 1MDBEL notes were confirmed at Aa2 and a negative outlook was assigned to the ratings of IPIC and Mubadala. The rating of Etisalat was confirmed at Aa3 and a negative outlook was assigned. These rating actions conclude the review for downgrade which Moody’s initiated in March 2016.
The actions follow the confirmation of the Aa2 long-term issuer rating of both the government of United Arab Emirates and the government of Abu Dhabi, as well as the assignment of a negative outlook on both of the ratings on 14 May 2016.