Moody's downgrades Egypt

Moody's Investors Service said it downgraded Egypt's government bond ratings to B3 from B2 and kept the rating on review for further possible downgrade. The agency also downgraded the country ceiling for foreign-currency bonds to B1 from Ba3 and the local-currency bond ceiling to Ba2 from Ba1. The short-term country ceiling for foreign-currency bonds remains unaffected at Not-Prime.

The agency said the downgrade was prompted by the following factors:

• The economic impact of the intensification of civil unrest, as reflected by the recent decree announcing a state of emergency;

• The further weakening in Egypt's external payments position given the large drop in January in the level of international reserves held by the Central Bank of Egypt; and

• The continued uncertainty surrounding the Egyptian government's ability to secure financial support from the International Monetary Fund.

Moody's said it will monitor the evolution of the above factors to assess whether to implement a further downgrade of Egypt's government bond rating or to confirm it.

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