JEDDAH: Moody's Investors Service downgraded Wednesday Egypt's foreign and local currency government bond ratings by one notch to Ba3 from Ba2. The outlook on these ratings remains negative. The rating action was prompted by prolonged political uncertainty in Egypt and concerns about whether a transition to an effective and stable government will be achieved. "The primary driver of today's downgrade of Egypt's sovereign bond ratings is the continued volatility in the country's domestic politics in the wake of the ousting of former president, Hosni Mubarak, in February," Moody's said. Besides, the cut was prompted by the adverse impact of the political uncertainty on the country's fiscal position and broader economic performance, Moody's said. " The deterioration of the political situation in Libya, which has negative implications for Egypt's economy and security," it added, saying that "these developments have caused a further erosion of Egypt's credit fundamentals relative to rating peers." Moody's also downgraded the country ceiling for foreign currency bonds to Ba1 from Baa3 and the country ceiling for foreign currency bank deposits to B1 from Ba3. The outlook on these ratings remains negative. The short-term country ceiling for foreign currency bonds was downgraded to NP from P-3. The local currency bond and deposit ceilings were downgraded to Baa3 from Baa1.
