Moody’s takes rating actions on five Tunisian banks

TUNIS (Capital Markets in Africa) – Moody’s Investors Service (“Moody’s”) has today downgraded to B1 from Ba3 the long-term local currency deposit ratings of Arab Tunisian Bank (ATB), Banque Internationale Arabe de Tunisie (BIAT) and Banque de Tunisie (BdT) while also downgrading the long-term local currency deposit ratings of Amen Bank (Amen) and Société Tunisienne de Banque (STB) to B2 from B1. Moody’s also changed the outlook on the long-term deposit ratings of ATB to negative from stable, and maintained a negative outlook on the long-term deposit ratings of the four other banks.

At the same time, Moody’s has downgraded the baseline credit assessments (BCAs) of ATB and BdT to b2 from b1, the BCA of BIAT to b3 from b2, the BCA of Amen to caa1 from b3 and Moody’s has affirmed the BCA of STB at caa3. Also, the adjusted BCA of ATB has been downgraded to b1 from ba3.

Moody’s has also today downgraded to B2 from B1 the long-term foreign currency deposit ratings of all banks, which is at the same level as the country ceiling for foreign currency deposits.

Lastly, Moody’s has downgraded the long-term Counterparty Risk Assessment (CR Assessment) of ATB to Ba3(cr) from Ba2(cr) and the CR Assessment of the four other Tunisian banks to B1(cr) from Ba3(cr).

Today’s actions on the Tunisian banks follows Moody’s downgrade of the Tunisian government’s issuer rating to B1 negative from Ba3 negative on 18 August 2017 (please see ‘Moody’s downgrades Tunisia’s rating to B1, maintains negative outlook’ https://www.moodys.com/research/–PR_371312). The sovereign action primarily reflects deterioration in the country’s fiscal position and institutional strength. Underpinning these challenges are a difficult operating environment characterised by low economic growth, inflationary pressures, low private investment and delayed structural reforms that Moody’s expect will impact the sustainability of banks’ credit growth and profitability whilst funding and liquidity are tight. As a result, Moody’s has lowered the banking Macro Profile of Tunisia to “Very Weak +” from “Weak -“, which in turn drives a lower standalone credit profile (BCA) for some banks.

The negative outlook on the banks’ ratings reflects the potential further weakening of Tunisia government’s support capacity, as implied by the negative outlook on the government’s issuer rating, and the potential further weakening in operating conditions for the banks beyond our current assumptions.