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Thursday, May 23, 2024

Egypt’s bonds tumble after Moody’s cuts credit rating

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Egypt’s sovereign dollar bonds fell sharply on Friday after Moody’s Investors Service downgraded the country’s credit rating deeper into junk territory, citing its worsening debt affordability and liquidity risks.

Moody’s lowered Egypt’s rating by one notch to Caa1 from B3, seven levels below investment grade, and maintained a negative outlook. The ratings agency said the downgrade reflected the country’s increasing difficulty in servicing its large and rising debt burden, which has been exacerbated by the COVID-19 pandemic and its economic fallout.

Egypt is facing a severe economic crisis, with record inflation, soaring government debt and a weakening currency that has eroded its foreign exchange reserves and prompted capital flight. The country has also been hit by external shocks, such as the war in Ukraine, which has disrupted its gas supplies and exports.

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