Moody's Investors Service downgraded on Tuesday 12/2/2013 Egypt's government bond ratings from B2 to B3, while maintaining the rating on review for further possible downgrade, according to a statement by Moody's.
Today's one-notch downgrade was prompted by several factors, including the economic impact of the intensification of civil unrest, as reflected by the recent decree announcing a state of emergency in the three Canal cities.
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, has also a negative effect on the rating.
In addition, downgrade was also prompted by the continued uncertainty surrounding the Egyptian government's ability to secure financial support from the International Monetary Fund.
As part of today's rating action, Moody's has also lowered the B3 country ceiling for foreign-currency bank deposits by one notch to Caa1, the Ba3 country ceiling for foreign-currency bonds by one notch to B1, and the Ba1 local-currency bond and deposit ceilings also by one notch to Ba2.
The short-term country ceiling for foreign-currency bonds remains unaffected at Not-Prime (NP).