Logo of Phnom Penh Post newspaper Phnom Penh Post - Moody's lowers rating

Moody's lowers rating

Moody's lowers rating

Cambodia's systemic support rating drops, but ACLEDA - the only rated Cambodian bank - gets Ba1 ‘stable outlook' rating

US-based ratings agency Moody's has revised its systemic support rating for Cambodia downwards from Ba1 to B1, it said Friday, following a review of the rating in relation to ACLEDA bank.

In a statement following the conclusion of the ratings review, Moody's set ACLEDA'S local currency deposit and issuer rating at Ba1 "with a stable outlook".

The ratings agency said last month it was evaluating ACLEDA's rating based on its exposure to the Cambodian banking system - Moody's has reconsidered its ratings criteria in the wake of the global financial crisis for non-Aaa countries, it said. ACLEDA is the only Cambodian bank to have an international rating.

"In light of Cambodia's current situation and prospects, Moody's has concluded that the systemic support input for Cambodian bank ratings should be changed from Ba1 to B1," said Christine Kuo, a Moody's vice president and senior analyst in the statement.

The Kingdom's rating - based on its ability to support local banks - has therefore been changed from "questionable credit quality" to "a generally poor credit quality".

Tal Nay Im, director general of the National Bank of Cambodia, declined to comment on Sunday.

Moody's said that the credit risk in the Cambodian banking system was moderate, "but it could increase if the economy falls into recession for a protracted period".

It added that high dollarisation limited the central bank's ability as lender of last resort.

The ratings agency noted, however, that the National Bank of Cambodia had set up an emergency credit line of US$100 million since the onset of the liquidity crunch that began to hit the domestic banking system at the end of last year.

Despite the adjustment of the Cambodia rating, ACLEDA bank was given a long-term currency deposit and issuer rating of Ba1, Moody's said, due to "the potential shareholder support [which] is sufficient to lift the bank's long-term local currency deposit and issuer ratings by one notch to Ba1 from its baseline credit assessment of Ba2". Shareholders had demonstrated long-term support for ACLEDA, the statement added, through equity and debt-financing.

"Normally they [Moody's] rate a bank no higher than the country rating," ACLEDA President and CEO In Channy said Sunday. "But ACLEDA is a special case," he added, referring to the bank's strong internal credit support structure.

MOST VIEWED

  • Chinese influx pushing locals, Westerners out of Preah Sihanouk

    Some within the Kingdom’s tourism industry have speculated that the recent influx of Chinese visitors may hinder domestic tourism as the price of accommodations in the coastal city of Sihanoukville continues to rise. Preah Sihanouk province, which has become a hotbed for Chinese investment

  • ‘Dire consequences’ from sanctions, warns AmCham

    American businesspeople in Cambodia have warned that any sanction against the Kingdom would have “dire consequences” that could push Cambodia even further into the arms of China. In a letter to US senators and representatives dated Monday, the American Chamber of Commerce Cambodia (AmCham) said

  • CPP: ‘Behave or Sokha suffers’

    The ruling Cambodian People’s Party (CPP) spokesman warned Kem Monovithya on Thursday that her attempt to damage “national reputation and prestige” would lead to her father, Kem Sokha, receiving even harsher punishment. Sok Eysan issued the warning as Monovithya, who is the court dissolved

  • Preah Sihanouk beach developments halted

    After receiving an order from Hun Sen, Minister of Land Management Chea Sophara led a team of experts and relevant officials to Sihanoukville to call a halt to the illegal development of a beach. The prime minister ordered the Prek Treng beach in Otres commune