City
Epaper

A-Pac banks rating actions highlight importance of sovereign support: Fitch

By ANI | Published: June 19, 2020 11:44 AM

Asia Pacific emerging market (EM) banks whose ratings benefit from sovereign support could be affected if the economic impact of coronavirus deepens and governments' policy responses fail to adequately mitigate risks to the economy, Fitch Ratings has said.

Open in App

Asia Pacific emerging market (EM) banks whose ratings benefit from sovereign support could be affected if the economic impact of coronavirus deepens and governments' policy responses fail to adequately mitigate risks to the economy, Fitch Ratings has said.

Over 100 A-Pac banks ratings were reviewed between March 12 and June 1 with negative rating actions -- mainly at unchanged rating levels representing just over 57 per cent of total A-Pac rating actions taken, according to the Fitch report.

Following the review of its portfolio of rated A-Pac banks, 42 per cent of rating actions taken by Fitch comprised long-term issuer default rating (IDR) affirmations with the outlook maintained.

"This reflects bank credit metrics providing rating headroom or our belief that around half of bank IDRs in A-Pac are driven by unchanged expectations of external support, mainly from sovereigns," said Fitch.

Developed market (DM) ratings fared worse than EM ratings with negative rating actions comprising just over 65 per cent of actions taken on DM banking groups compared with about 48 per cent for EM.

The number of downgrades was equal among DM and EM jurisdictions at 10 each. About half of EM banking groups' IDRs were affirmed with no outlook or rating watch changes due mainly to sovereign support.

However, for predominantly EM-based banking groups whose IDRs benefit from sovereign support, the ratings of supporting entities (including sovereigns) could be affected if the economic impact of the coronavirus deepens and governments' policy responses fail to adequately mitigate risks to the economy, or the fiscal burden of mitigating the risks is outsized.

In these cases, actions taken on their supporting sovereign would then be mirrored by the banks' IDRs. This has already happened for banks in Malaysia, Thailand, Vietnam and the Philippines, said Fitch.

( With inputs from ANI )

Tags: asiaMalaysia
Open in App

Related Stories

InternationalRed Ape for Palm Oil? Malaysia Plans To Give Orangutans to Countries That Buy Palm Oil

InternationalMalaysia: 10 Killed After Two Malaysian Military Helicopters Crash

InternationalMalaysia: 10 Killed After Two Military Helicopters Crash in Mid-Air Collision; Video Goes Viral

InternationalEAM Jaishankar: Meets Malaysian PM, Appreciates His Vision for India-Malaysia Relations (See Tweet)

Other SportsAsian Track Cycling Championships 2024: Para-Cyclists Excel As India Bags 2 Gold, 1 Silver and 1 Bronze on Day Two

Business Realted Stories

BusinessIndian markets appear to have dismissed coal invoicing allegations by FT, OCCRP against Adani Group

BusinessIndustries and Commerce Department hold investors meet in Jammu

BusinessFT, OCCRP reports fail to impress Indian investors as Adani Group stocks continue to climb

BusinessNo Indian citizen will be left behind in journey to Viksit Bharat@2047: EAM Jaishankar

BusinessSri Lankan state enterprises open for private investments