Shocking: Moody’s Downgrades Six Major Bangladeshi Banks After Drastic Sovereign Rating Cut

Moody’s Investor Service has adjusted its ratings outlook for six major banks in Bangladesh, highlighting concerns following the country’s recent sovereign rating downgrade. The affected banks include BRAC Bank, City Bank, Dutch-Bangla Bank, Eastern Bank, Mercantile Bank, and Premier Bank. The rating agency has changed the outlook on these banks’ long-term deposit ratings from stable to negative.

Earlier this week, Moody’s downgraded Bangladesh’s long-term sovereign ratings from B1 to B2. This marks the second downgrade in less than two years. Despite this change, the short-term ratings remain at ‘Not Prime’. The downgrade illustrates growing concerns about Bangladesh’s economic stability.

In addition to revising the credit ratings, Moody’s also adjusted its economic forecasts for Bangladesh. The GDP growth estimate for the current fiscal year has been cut from 6.3 percent to 4.5 percent, indicating a significant slowdown. Moreover, projections for the next fiscal year have also been trimmed to 5.8 percent from the earlier forecast of 6 percent.

This shift towards a negative outlook comes for the first time in 14 years since Bangladesh began receiving ratings from Moody’s in 2010, as reported by United News of Bangladesh (UNB). This downgrade and the associated negative outlook are likely to affect both public and private sectors by increasing borrowing costs, complicating access to international funds amidst persistent high inflation.

Experts suggest that the lowered ratings might lead to more cautious approaches in financial engagements, potentially straining the country’s economic resources further. With higher costs of borrowing, both the government and private enterprises could face significant hurdles in maintaining their financial health. The overall economic landscape in Bangladesh is becoming challenging, calling for strategic efforts to mitigate further fiscal stress and preserve the nation’s financial stability.

Original Story https://www.newsonair.gov.in/moodys-downgrades-six-bangladeshi-banks-following-sovereign-rating-cut/
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Publish Date: 2024-11-20 22:31:00