Moody’s has downgraded the subordinated debt ratings (by one to three notches) of 12 banks in the Gulf Cooperation Council (GCC) countries due to “heightened risk of the imposition of losses on these instruments,” the agency said in a statement.
The list includes Arab National Bank, Banque Saudi Fransi, Abu Dhabi Commercial Bank, Emirates NBD P, First Gulf Bank, Mashreqbank, Commercial Bank of Qatar, Doha Bank, Qatar National Bank, Burgan Bank, Bank Muscat and BBK. All other ratings and outlooks for these issuers remain unaffected, Moody’s said.
“Although the downgrades capture the evolving risk profile of subordinated debt, the rating agency continues to recognise the unique record, capacity and willingness of Gulf authorities to extend support, particularly to government-owned banks,” Moody’s noted.
The downgrade of the subordinated debt ratings reportedly implies that the risk profile of junior debt instruments has risen, given global regulatory trends of imposing losses on junior creditors as part of bank bailouts orchestrated by governments.
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