Moody’s downgrades Egypt

Moody's Investors Service said it downgraded the long-term foreign and local currency issuer ratings of Egypt to Caa1 from B3 and changed the outlook to stable, concluding its review for downgrade initiated on May 9.

Moody's also downgraded Egypt's foreign-currency senior unsecured ratings to Caa1 from B3, and its foreign-currency senior unsecured medium-term note program rating to provisional Caa1 from provisional B3.

In addition, Moody's said it downgraded the backed senior unsecured ratings of the Egyptian Financial Co. for Sovereign Taskeek sukuk company to Caa1 from B3 and its program rating to provisional Caa1 from provisional B3, which are, in Moody's view, ultimately the obligation of Egypt.

“The downgrade reflects the government of Egypt's worsening debt affordability trend and the persistence of foreign currency shortages in the face of increasing external debt service payments over the next two years, amid increasingly constrained policy options to rebalance the economy without exacerbating social risk,” the agency said in a news release.

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