Moody’s Declares ‘Deposit Default’ for Three Top Lebanese Banks - Bloomberg

Moody’s Declares ‘Deposit Default’ for Three Top Lebanese Banks - Bloomberg:

Moody’s Investors Service said emergency measures by Lebanon’s central bank to address foreign-currency shortages forced three of the country’s top lenders into a “deposit default.”

Bank Audi, Blom Bank and Byblos Bank also had their baseline credit assessments, or BCAs, downgraded to the second lowest level in what Moody’s said wasn’t a credit rating action. It describes BCAs as an opinion on “issuers’ standalone intrinsic strength,” absent any extraordinary support from outside.

“The downgrade is driven by the payment of part of the interest for foreign currency deposits in local currency by banks in Lebanon following instructions by the country’s central bank, which constitutes a deposit default based on the rating agency’s own definitions,” the company said in a statement.

Staring down the worst financial crisis the country has faced in decades, the central bank last week told lenders to pay half of foreign-currency deposits in Lebanese pounds. It plans to do the same on what it owes banks for dollar-denominated deposits and certificates of deposits.