Global rating agency Moody’s has revised its ratings for six Bangladeshi banks, citing concerns over the country’s recent sovereign downgrade. The banks affected are BRAC Bank, City Bank, Dutch-Bangla Bank, Eastern Bank, Mercantile Bank, and Premier Bank. Moody’s has revised the outlooks on the long-term (LT) deposit ratings of all six banks to negative from stable.

Earlier this week, Moody’s downgraded Bangladesh’s long-term ratings to B2 from B1, marking the second consecutive downgrade in under two years. The short-term ratings were affirmed at ‘Not Prime’.

The rating agency also revised Bangladesh’s GDP growth forecast, projecting a slowdown to 4.5 percent from the earlier estimate of 6.3 percent for the current fiscal year. For the next fiscal year, the projection has been lowered to 5.8 percent from 6 percent.

This marks the first time in 14 years that Moody’s has revised Bangladesh’s outlook to “negative” from “stable” since the country began receiving ratings from the agency in 2010, reports United News of Bangladesh (UNB).

The downgrade and negative outlook are expected to increase borrowing costs for both the government and the private sector, exacerbating challenges in accessing international funds amid ongoing high inflation.