Moody's downgrades Egypt on political unrest

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Moody's Investors Service has downgraded Egypt's sovereign foreign currency credit rating to Caa1 form B3, citing unsettled political conditions, and said risks of a default have increased.

Egypt's economy has been in crisis since the 2011 overthrow of Hosni Mubarak, with Islamist President Mohamed Mursi's cash-strapped government grappling with sliding currency reserves, dwindling tourism, a soaring budget deficit and a wave of often violent street protests.

"More than two years into the Egyptian revolution, the continued unsettled political conditions have significantly weakened Egypt's economy," Moody's said in a statement.

The government's inability to secure financing from the International Monetary Fund has exacerbated a lack of predictability in the Middle East nation's economy and fiscal policies.

The outlook on the credit is negative, Moody's said. Egypt is rated one notch higher at B-minus with a negative outlook by Standard & Poor's while Fitch Ratings has Egypt two notches higher at B with a negative outlook.

"The sustained deterioration in Egypt's external payments position and government finances have reached a level at which the country's vulnerability to economic or political shocks has widened and the risk of default has consequently increased," Moody's said.

While the risk of a default has increased, Moody's cautions that a default is not necessarily imminent.

"At the Caa1 rating level, the historical record shows that the average, cumulative default rate over a one-year horizon is close to 10 percent and over a five-year horizon slightly under 40 percent," Moody's said.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Capital plans: how Qatar's banks are shaping up

Capital plans: how Qatar's banks are shaping up

Ahli Bank chief executive Salah Murad says that despite competition...

The spectacular rise and fall of Arabtec

The spectacular rise and fall of Arabtec

The ups and downs of Dubai most heavily traded stock teaches...

1
MidEast investors eye $180bn overseas spending

MidEast investors eye $180bn overseas spending

Arab institutional investors have been buying up swathes of ...

Most Discussed
  • 6
    Revealed: average Dubai apartment, villa price tags

    The villa we rent in a prime area has been on the market for 6 months. Not one buyer has asked to look. Its all very well talking about average prices... more

    Wednesday, 30 July 2014 2:48 PM - chalky6766
  • 6
    What is the best credit card for Skywards miles?

    It's often pointless amassing loads of airline frequent flyer miles, including Skywards, as most airlines offer so few seats for redemption purposes. more

    Thursday, 24 July 2014 1:10 PM - smith
  • 4
    Akbar Al Baker’s double standards?

    In this part of the world, once a person is appointed to a high profile job, he thinks that superior knowledge in every technology, business process and... more

    Wednesday, 30 July 2014 4:30 PM - M. A. Hassan