S&P lowers ratings on Qatari banks after sovereign downgrade

Standard & Poor's (S&P) has taken various negative rating actions on Qatari banks after downgrading Qatar’s long-term sovereign credit rating to “AA-“ and placing it on CreditWatch Negative.

The Qatari banking sector is heavily reliant on external funding, which S&P identified as a source of tail event risk.

On June 8, S&P has lowered its long-term rating on Qatar National Bank (QNB), which is viewed as a government-related entity that has a very high likelihood of extraordinary support, in case of need, to “A” from “A+.”

S&P placed its long- and short-term ratings on QNB, Commercial Bank (CBQ), Doha Bank, and Qatar Islamic Bank (QIB) on CreditWatch Negative as a direct consequence of rating actions on the sovereign.

S&P’s downgrades came after Saudi Arabia, UAE, Bahrain, and Egypt severed diplomatic, trade and transport links with Qatar earlier this week.

The latest diplomatic crisis is expected to exacerbate the country’s external vulnerabilities and put pressure on its economic growth and fiscal metrics, S&P added.