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
Women edge into Gulf boardrooms as economies, societies shift

Women edge into Gulf boardrooms as economies, societies shift

Amina al-Rustamani, CEO of TECOM Investments, is leading the...

2
Dubai mulls rule change to lure more domiciled funds

Dubai mulls rule change to lure more domiciled funds

Proposed rules would create a new class of funds in the Dubai...

Gulf's rift over Qatar may slow investment, reforms

Gulf's rift over Qatar may slow investment, reforms

Analysts suggest dispute may not hurt immediately but could impact...

Most Discussed