Moody's downgrades Arab Bank Australia

SYDNEY (AAP) - Moody's Investors Service has downgraded the long-term debt rating of Arab Bank Australia because of the weakened ability of its overseas parent to provide financial support.
Moody's said it had downgraded to Baa2 from Baa1 Arab Bank's long-term debt and its subordinated debt rating had been lower to Baa3 from Baa2.
The bank financial strength rating of D+ has been confirmed.
Concurrently, Moody's has assigned a negative outlook to all ratings.
The rating actions conclude the review initiated on Arab Bank Australia's parent, Arab Bank plc in February.
"The downgrade of Arab Bank Australia to Baa2 reflects our view that whilst the potential for support from its parent Arab Bank plc remains very high, the ability of the parent to provide that support has weakened", said Daniel Yu, an analyst with Moody's Sydney office.
"Nevertheless, the potential for parental support remains an important, positive rating factor for Arab Bank Australia", explained Yu.
The changes to Arab Bank Australia's ratings are a direct result of its parent's stand-alone rating being downgraded from A3 to Baa1 with a negative outlook of C-.
The change was mainly driven by the parent's sizeable regional exposure to countries in the Middle East and North Africa which are facing increased political and economic risks following recent political turmoil.