S&P reaffirms rating on Barclays but keeps negative outlook

Standard&Poor's reaffirmed its rating on Barclays's long-term debt, hailing progress on increasing the resilience of the franchise, but kept the outlook at negative due to the risks around the wider UK banking sector.

Barclays had made "significant" progress in building its additional loss-absorbing capacity, S&P said.

To back up its arguments, the ratings agency highlighted the upcoming closure of Barclays's non-core division on 30 June, six months ahead of schedule.

Despite that, S&P added, "we do not currently believe that the ratings on Barclays could withstand a lowering of our assessment of the U.K. banking system."

Hence its analysts's decision to keep the outlook on the lender's debt at 'negative'.

"Notwithstanding the reasonable geographic diversification of the group's revenue streams relative to domestically focused peers, we do not observe sufficient reasons not to revise down Barclays' 'bbb+' unsupported group credit profile (UGCP) if we revised down our assessment of U.K. economic risk," S&P also said.

In a separate report published the day before, S&P had put the odds of a downwards revision to its assessment of the risks facing the UK at one-in-three.