Global rating agency Moody’s has downgraded the long-term local and foreign currency deposit ratings of BRAC Bank, Mercantile Bank, and Premier Bank due to Bangladesh’s recent sovereign downgrade to B2 on November 18, 2023. This marks the first downgrade in 14 years, reflecting heightened economic risks. BRAC Bank’s ratings fell to B2 from B1, while Mercantile Bank and Premier Bank were lowered to B3 from B2. Meanwhile, City Bank, Eastern Bank, and Dutch-Bangla Bank retained their B2 ratings, but all six banks saw their outlooks revised to negative from stable.
The downgrades and negative outlooks are expected to increase borrowing costs for both public and private sectors, complicating access to international funds amidst high inflation. Additionally, Moody’s revised Bangladesh’s GDP growth forecast to 4.5% for the current fiscal year from the previous 6.3% estimate, with next fiscal year projections also lowered to 5.8% from 6%, signaling economic challenges ahead.
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