Moody's: Lebanese banks to negative

Moody's Investors Service said it changed the outlook on the long-term local-currency Ba3 deposit ratings of the three largest Lebanese banks to negative from stable: Bank Audi SAL, Blom Bank SAL and Byblos Bank SAL.

Concurrently, Moody's changed the outlook on the three banks' B1 long-term foreign-currency deposit ratings, and the long-term national scale ratings of Aa1.lb for Bank Audi and Blom Bank and Aa2.lb for Byblos Bank to negative from stable.

Moody's said the actions follow the change in the outlook on Lebanon's B1 government bond ratings to negative on May 14 and reflect: (a) Moody's view that the government's weakening creditworthiness weighs on the standalone credit profile of the banks given the high credit linkages between their balance sheets and sovereign credit risk; (b) Moody's expectation that the banks' asset quality is likely to deteriorate as a result of the weakening operating environment; and (c) the risk of further weakening in the government's capacity to support the banks in case of need.

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