These actions follow the downgrade in Yemen’s Sovereign Long-term and Short-term Foreign Currency Ratings to ‘B-’ and ‘C’, respectively, from ‘B’ and ‘B’. The Outlook for the Sovereign Ratings was changed to ‘Negative’ from ‘Stable’.
According to CI’s rating Methodology, the rating action on YBRD’s Foreign Currency Ratings captures the constraint imposed by the revised Sovereign Rating. YBRD’s Financial Strength Rating will be subject to downward pressure due to the disruptive effects of the current political and social upheaval on the Bank’s operations. It is also expected that the deterioration in the operating environment may affect the Bank’s financial profile and overall financial performance.
For the sector overall, non-performing loans are likely to rise, although this is partly mitigated by the fact that loans form only a small proportion of assets at most banks. Likely weaker profitability will also reduce their capacity to maintain adequate coverage. Liquidity is so far said to be maintained at pre-crisis levels but this could change quickly given the current situation.
Thursday, August 4- 2011 @ 11:24 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.