Moody’s Lebanese warning shot

ENAR

Moody’s rating agency this week issued two warnings to the Lebanese economy and banking sector. On Tuesday they changed the outlook for government bonds from stable to negative and the following day they did the same for the deposits ratings of the country’s three biggest banks — Bank Audi, Blom Bank and Byblos Bank. The official reason the banks were dragged into this is their overexposure to government credit risk — investments in government securities and central bank certificates of deposits. But these ratios have been incredibly high for years and Moody’s has had little concern. What has changed, then, is the ratings agency’s confidence in the government to fulfill its obligations. Related article: A beginner’s guide to Lebanon’s debt While it must be stressed that this was a change in outlook rather than a downgrade, it should be taken as a warning that the latter will follow will in