Moody's on Feb. 23 revised the outlooks to negative from stable for Colombian lenders Bancolombia SA and Banco de Bogotá SA following a similar action on Colombia's Baa2 sovereign bond rating.
The outlook revision on the sovereign rating reflects the increasing fiscal challenges of the country.
Meanwhile, Moody's affirmed the banks' Baa2 long-term global local- and foreign currency deposit ratings and long-term foreign currency senior unsecured debt ratings.
The affected ratings are positioned at the same level of the sovereign bond rating as Moody's "assesses a very high probability that the government will support them if needed." This considers the "very large deposit franchises of the affected banks, which are the two largest in Colombia," the rating agency said.
It also considers the "Colombian authorities' track record of providing support to systemically important distressed financial institutions in the past; and the material systemic consequences of an unsupported failure of any of them," Moody's noted.