Bank Leumi le-Israel B.M. Long-Term Rating Lowered To 'BBB+'; Outlook Negative.Summary: Standard & Poor's Ratings Services Ratings Service
A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. said today that it lowered its long-term counterparty Counterparty
The other participant, including intermediaries, in a swap or contract. credit rating on Israel-based Bank Leumi Bank Leumi (Hebrew: בנק לאומי, lit. National Bank) is an Israeli bank. le-Israel B.M. (Leumi) to 'BBB+' from 'A-'. At the same time, the 'A-2' short-term counterparty credit rating on Leumi was affirmed. The outlook on Leumi is negative.
"The rating actions reflect our view of the negative impact of the global and domestic economic and market downturn on Leumi's earnings and asset quality," said Standard & Poor's credit analyst Magar Kouyoumdjian. Standard & Poor's anticipates that the global recession could severely affect Israel's economy in 2009. "We believe that growth prospects will deteriorate markedly compared with previous years, with real GDP Real GDP
This inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. Often referred to as "constant-price", "inflation-corrected" GDP or "constant dollar GDP". contracting by 1.5% in 2009, with only a modest 0.8% growth rate forecast for 2010," added Mr. Kouyoumdjian.
Standard & Poor's Ratings Services said today that it lowered its long-term counterparty credit rating on Israel-based Bank Leumi le-Israel B.M. (Leumi) to 'BBB+' from 'A-'. At the same time, the 'A-2' short-term counterparty credit rating on Leumi was affirmed. The outlook on Leumi is negative. "The rating actions reflect our view of the negative impact of the global and domestic economic and market downturn on Leumi's earnings and asset quality," said Standard & Poor's credit analyst Magar Kouyoumdjian. Standard & Poor's anticipates that the global recession could severely affect Israel's economy in 2009. "We believe that growth prospects will deteriorate markedly compared with previous years, with real GDP contracting by 1.5% in 2009, with only a modest 0.8% growth rate forecast for 2010," added Mr. Kouyoumdjian. With both the global and Israeli economies and markets already slowing markedly in 2008, Leumi reported a loss in the fourth quarter of the year, driven by losses on its securities and interbank in·ter·bank
Relating to, involving, or connecting two or more banks: interbank borrowing; an interbank network of automated teller machines. portfolio as well as significantly increased credit provisions. In our view, earnings will remain suppressed in the short-to-medium term given the ongoing asset quality pressure and the associated credit provisioning needs, as well as margin contraction due to the low interest rate environment.The ratings on Leumi are based on our view of its strong market position and domestic banking franchise, sound funding profile, and good liquidity. The ratings are constrained con·strain
tr.v. con·strained, con·strain·ing, con·strains
1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force.
2. by its vulnerable loan quality due to the economic downturn and its impact on domestic borrowers, in particular large Israeli conglomerates, which are highly leveraged and are experiencing tight liquidity. "We expect that Leumi's financial profile and business prospects, while still considered satisfactory, will be adversely affected by the ongoing setbacks in its operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. , particularly due to the economic slowdown and weaker capital markets both domestically and globally," said Mr. Kouyoumdjian. If these setbacks are greater than we anticipate, Leumi's creditworthiness Creditworthiness
The condition in which the risk of default on a debt obligation by that entity is deemed low.
Eligibility of an individual or firm to borrow money. could weaken further. A significant increase in problem loans (particularly if one or more of the large Israeli conglomerates' creditworthiness weakens substantially, given borrower concentrations), and the associated erosion of earnings and capitalization, would lead to a downgrade Downgrade
A negative change in the rating of a security.
For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. . The bank also has potential vulnerability to further losses on its securities portfolio and interbank exposures, with material unrealized losses Unrealized Loss
A loss that results from holding onto an asset rather than cashing it in and officially taking the loss.
Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. . Furthermore, any significant escalation es·ca·late
v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates
To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf.
v.intr. in economic and political turbulence in Israel could materially affect asset quality and financial performance, and could put pressure on the ratings. Over the longer term, a less risky operating environment could lead to improved creditworthiness for Leumi. Furthermore, if economic prospects strengthen and loan quality, cost efficiency, and capitalization also improve, this could lead to a positive rating action.
2009 Al Bawaba (www.albawaba.com)
2009 Al Bawaba (Albawaba.com)
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