Capital Intelligence Ratings (CI Ratings or CI) today announced that it has downgraded the Long-Term Foreign Currency Rating (LT FCR) of Tadhamon Bank (TB or the Bank) to ‘C-’ from ‘C’. At the same time, CI Ratings has affirmed the Short-Term (ST) FCR at ‘C’. The Outlook on the LT FCR has been revised to Stable from Negative. CI has affirmed TB’s Bank Standalone Rating (BSR) of ‘c’, Core Financial Strength (CFS) rating of ‘c+’ and Extraordinary Support Level (ESL) of Uncertain. The Outlook for the BSR has also been revised to Stable from ‘not meaningful’.
The lowering of the Bank’s LT FCR reflects the downward adjustment of CI’s internal assessment of sovereign credit risk for Yemen. The downward revision is primarily driven by the deterioration in the sovereign’s shock absorption capacity in view of increasing current account deficit, depleted reserves, and an absence of access to external financing. Yemen has very weak public finances and large…