Standard & Poor’s Global Ratings (S&P), the international rating agency, downgraded the long-term issuer credit rating of three Lebanese banks, namely Bank Audi, BLOM Bank, and BankMed, from “CCC” to Selective Default “SD” while removing them from CreditWatch Negative. The agency also lowered the short-term issuer credit rating for Bank Audi and BankMed from “C” to “SD”. According to the report, this rating action comes in light of Banque Du Liban (BDL)’s recent circular in which it instructs banks to settle half of the interest on long-term foreign currency deposits that have not matured by December 5, 2019 in the local currency, which in S&P’s opinion is “contrary to the terms of the original contractual agreements”. Furthermore, the agency foresaw harsher measures during the upcoming period amid the shrinking liquidity in the country and swelling pressure on banks’ funding positions on the short run. From another standpoint, S&P highlighted the inability in the previous years to prevent the accumulation of imbalances on banks’ balance sheets between assets and liabilities. It went on to mention that BDL’s financial engineering schemes have indeed supported banks’ profitability, yet came at the expense of a growing exposure to the sovereign. Gazing into the future, the agency anticipated sustained pressure on banks’ funding structure in the next few years on the back of persistent economic tensions and the inability to bolster deposit inflows, thus revising its Banking Industry Country Risk Assessment (BICRA) from “8” to “10” (highest risk).