S&P affirms Egypt

Standard & Poor's said it affirmed the BB/B long- and short-term foreign-currency ratings and BB+/B long- and short-term local-currency ratings on the Arab Republic of Egypt and removed the long-term ratings from CreditWatch, where they were placed with negative implications in February.

The agency also said it affirmed the 3 recovery rating on Egypt's senior unsecured foreign-currency sovereign debt, indicating 50% to 70% recovery in a debt restructuring or default scenario.

The agency also said it maintained Egypt's transfer and convertibility assessment at BB+.

The outlook is negative.

The ratings could stabilize at current levels if Egypt's political transition strengthens the social contract and if government debt dynamics remain within the forecast of net general government debt reaching a plateau of 62% of GDP, S&P said.

Conversely, if the political transition falters or if concessional external financing does not materialize to finance fiscal deficits, the agency said it could lower Egypt's ratings later this year or in 2012.

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