DOHA: Moody’s Investors Service has assigned Counterparty Risk Assessments (CR Assessments) to seven Qatari banks, in line with its revised bank rating methodology.
At the same time, Moody’s has affirmed the subordinated debt ratings of two Qatari banks and for its own business reasons withdrawn the outlooks on these subordinated instruments.
The banks that Moody’s assigned the CR Assessments are: Al Khalij Commercial Bank, Barwa Bank, Commercial Bank of Qatar, Doha Bank, Masraf Al Rayan, Qatar International Islamic Bank and Qatar National Ban.
The ratings agency’s actions reflect the new aspects of Moody’s bank rating methodology published on March 16, 2015.
CR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails and are distinct from debt and deposit ratings in that they consider only the risk of default rather than the likelihood of default and the expected financial loss suffered in the event of default, and apply to counterparty obligations and contractual commitments rather than debt or deposit instruments.
The CR Assessment is an opinion of the counterparty risk related to a bank’s covered bonds, contractual performance obligations, derivatives (eg, swaps), letters of credit, guarantees and liquidity facilities.
In most cases, the starting point for the CR Assessment—which is an assessment of the ability to avoid defaulting on its operating obligations—is one notch above the bank’s Adjusted Baseline Credit Assessment (BCA). The CR Assessment for all rated banks in Qatar is one notch higher than their deposit and senior unsecured debt ratings.
The subordinated debt ratings are linked to the banks’ adjusted BCAs. Therefore, any upward or downward movement in the ratings could develop following either the raising or lowering of the adjusted BCAs for these banks.
The Peninsula
