Moody's Investors Service affirmed the B3 long-term deposit ratings of five Pakistani banks but changed the outlook on their long-term deposit ratings to negative from stable.
The banks are Allied Bank Ltd., Habib Bank Ltd., MCB Bank Ltd., National Bank of Pakistan, and United Bank Ltd.
The rating agency also downgraded the long-term foreign currency Counterparty Risk Ratings of Allied Bank, MCB and United Bank to B3 from B2. These ratings are now constrained by Government of Pakistan's foreign currency country ceiling, which was lowered to B3 from B2, the agency said in a note on Wednesday.
The rating actions follow Moody's decision to change the Government of Pakistan's B3 ratings to negative from stable on 2 June 2022, and also lower the country's local and foreign currency country ceilings to B1 and B3, from Ba3 and B2, respectively.
The negative outlook on the sovereign is driven by Pakistan's heightened external vulnerability risk and uncertainty around the sovereign's ability to secure additional external financing to meet its needs, it said.
(Reporting by Brinda Darasha; editing by Daniel Luiz)