Moody's Investors Service has today affirmed the Government of Egypt's long-term issuer and senior unsecured bond ratings at B3. The outlook remains stable.
The rating affirmation is based on Moody's view that the B3 rating appropriately captures Egypt's credit risk profile. Very weak government finances will continue to constrain the rating pending further clarity on the sustainability and impact of the reform programme. While Egypt's external liquidity position has significantly improved over the past 12 months, the increase in international reserves has been mainly driven by debt-creating inflows, thus also raising the level of external debt and foreign-currency denominated debt.
The stable rating outlook reflects Moody's view that upside and downside risks to the rating are balanced. Reform progress has been impressive. However, while political stability has improved to some degree, reform momentum may face headwinds, including from the presidential election set to take place by May 2018. Visibility on the extent to which the reform programme will materially improve the sovereign credit profile in the coming years remains limited.
In today's rating action Moody's has also affirmed the provisional senior unsecured (P)B3 Medium-Term Note programme rating. Egypt's country ceilings stay unchanged at B2/Not Prime (NP) for the foreign-currency bond ceiling, Caa1/NP for the foreign currency deposit ceiling, and Ba2/NP for the local-currency country risk ceilings.
