Bahrain-based Al Baraka Banking Group lowered to ‘BB+/B’ on high MENA sovereign and economic risks

Standard & Poor’s Ratings Services has lowered its long- and short-term counterparty credit ratings on Bahrain-based Al Baraka Banking Group (ABG) to ‘BB /B’ from ‘BBB-/A-3’. The outlook is negative. The rating action follows S&P’s review of the wider implications of deteriorated sovereign creditworthiness in the past 12 months in some countries in the Middle East and North Africa (MENA) , where ABG operates, especially Egypt and Jordan. The ratings agency lowered its assessment of ABG’s risk position to “adequate” from “strong,” owing to its operations in high-risk MENA countries. The ratings remain supported by ABG’s strong business position, and its average funding and adequate liquidity position. The negative outlook reflects S&P’s view that ABG’s capitalization could deteriorate to levels deemed as weak if, for instance, Egypt defaults and further economic stress materializes in Jordan.

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