S&P downgrades Egypt

Standard & Poor's said it lowered its long-term foreign-currency sovereign credit rating on the Arab Republic of Egypt to BB- from BB. S&P said it also lowered the long-term local-currency rating to BB- from BB+.

At the same time, S&P said, the agency affirmed the B short-term ratings on Egypt. The outlook is negative.

The transfer and convertibility assessment was also revised to BB- in line with the sovereign ratings and the recovery rating on the unsecured foreign-currency debt remains unchanged at 3, indicating S&P's expectation of 50% to 70% recovery in the event of a default, the agency said.

"The downgrade reflects our opinion that risks to macroeconomic stability have risen during the transition period for Egyptian political reform, which we expect to evolve over the next two years," said S&P credit analyst Trevor Cullinan in a news release. "These risks center on the government's fiscal stance but also encompass price stability and balance of payments pressure."

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