Last updated: 21 March, 2013

Moody’s cuts Egypt’s bond rating to Caa1

Credit ratings agency Moody’s said on Thursday it has downgraded Egypt’s government bond ratings by one notch to Caa1 from B3, saying political instability had “significantly weakened” the economy.

Moody’s also said the rating outlook was negative.

“More than two years into the Egyptian revolution, the continued unsettled political conditions have significantly weakened Egypt’s economy,” the agency said in a statement.

“The sustained deterioration in Egypt’s external payments position and government finances have reached a level at which the country’s vulnerability to economic or political shocks has widened.”

Moody’s pointed to “continued uncertainty surrounding the Egyptian government’s ability to secure financial support from the International Monetary Fund”.

It said “economic and political challenges that have intensified as Egypt’s revolution has unfolded,” following the 2011 revolt which overthrew president Hosni Mubarak.

“As a result, there is more uncertainty over Egypt’s ability to regain macroeconomic stability and shore up its external and fiscal positions.”

The ruling Muslim Brotherhood has seen about 30 of its offices across the country attacked in widespread protests against President Mohamed Morsi, the Islamists’ successful candidate in last June’s election.

And dozens of people were killed in several days of violence in Port Said after a court verdict on January 21 over a deadly riot at a football match in the city last year.