Moody’s cuts #Egypt’s rating on ‘unsettled’ political conditions

Moody’s Investors Service on Thursday 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.

https://www.arabfinance.com/News/newsdetails.aspx?Id=250982

Advertisements
This entry was posted in News and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s