Moody's cuts Tamweel on falling asset quality

Ratings agency Moody's downgraded the issuer rating of Dubai mortgage lender Tamweel on Thursday, citing factors including the firm's falling asset quality, a slow state support process and higher funding costs.

The downgrade to Baa1 from A3 was driven partly by "the deterioration of Tamweel's standalone financial profile in the wake of materially higher funding costs, heightened provision charges and frozen asset growth, with very limited capacity to absorb increasing charges with higher volumes", Moody's said.

Moody's also cited "high dependence on concentrated wholesale bank funding amplifying liquidity risks, and forcing indirect government support .. (and) a very slow merger and support process from the authorities, with delays placing Tamweel in a difficult operating position, which in turn contributes to a weakening of its franchise value".