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04/11
Egypt debt rating lowered by Moody’s in crisis
NEW YORK (CNNMoney) — Moody’s downgraded debt ratings for Egypt, and slapped the nation wracked by political turmoil with a negative outlook, the ratings agency said Monday.
Moody’s downgraded Egyptian bond ratings further into junk status, to "Ba2" from "Ba1," and changed the outlook to "negative" from "stable."
The rating agency announced the downgrade as demonstrations against the government of long-time president Hosni Mubarak entered their seventh day. Parts of downtown Cairo have been paralyzed by the crush of protestors and armored military vehicles, and the headquarters of the ruling party was set on fire.
Despite the turmoil, the 82-year-old Mubarak has given no indication that he’s prepared to give up control after nearly 30 years in power.
"Today’s rating action was prompted by the recent significant rise in political event risk and concern that the policy response could undermine Egypt’s already weak public finances," said Moody’s, in a report on the downgrade.
Moody’s said that the "increased event risk" resulting in the downgrade "has resulted from escalating political tensions in the country following the recent uprising in Tunisia, with large-scale anti-government protests taking place."
Moody’s said that "deep-seated political and socio-economic challenges" undermining Egypt "include a chronic high rate of unemployment, elevated inflation and widespread poverty."
The unrest of the world’s most populous Arab nation has had wide implications, driving down stocks last week and driving up oil prices. 