Moody's slashes IBEC

Moody's Investors Service said it downgraded the International Bank for Economic Co-operation's long-term issuer rating to Ca from Baa3 and changed the outlook to negative from stable.

The announcement of five European Union shareholders to withdraw from the bank, triggered the downgrade, Moody’s said. In their announcement, the ministries of finance of Poland, the Czech Republic, Romania, Slovakia and Bulgaria stated they intend to terminate their participation in IBEC, aiming for an orderly withdrawal.

“Furthermore, this is a strong indication that IBEC is eventually likely to become close to fully owned and supported by Russia, and Moody's view is that holders of IBEC bonds will not be in a better position than holders of Russian government debt. As such, Moody's has aligned IBEC's rating with that of the government of Russia,” the agency said in a press release.

The negative outlook reflects the added risks to IBEC's credit profile from the potential ramifications of the shareholder withdrawal, the agency noted.

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