The Egyptian economy took another hit on Thursday evening as Moody’s downgraded the country’s credit rating. The move initially triggered a negative reaction in the country’s bond markets before a rebound on Friday.
The New York-based credit rating agency Moody’s downgraded Egypt’s foreign and local currency issuer ratings to Caa1, indicating debt obligations of “poor standing” that are subject to “very high credit risk,” per the firm’s criteria.
Moody’s cited Egypt’s persistent foreign currency shortages as well as the government’s "increasingly constrained policy options to rebalance the economy without exacerbating social risk,” according to a press release.
Moody’s revised Egypt’s outlook to “stable,” indicating it expects Egypt to remain at a Caa grade. The agency said this decision was due to Egypt’s track record of economic reform and the expected continuation of support from the International Monetary Fund.
