Fitch downgrades Egypt sovereign credit to junk status
16 Jun 2012
Fitch Ratings downgraded the sovereign credit of Egypt to junk status yesterday, due to the rising political crisis following the Egyptian Supreme Constitutional Court annulling parliamentary elections.
The one notch rating, cut to B-plus from BB-minus, comes with a negative outlook, meaning there was a greater than 50 per cent chance of increased downgrades, over the coming 12 to 18 months.
The court's ruling yesterday to dissolve the Islamist-led parliament served to only worsen an already troubled transition to democracy following the overthrow of Hosni Mubarak, who held power for 30 years.
According to Richard Fox, head sovereign analyst for Middle East and Africa at Fitch, whatever the ultimate outcome of the events, the political and policy-making process had been complicated, delaying the likely implementation of the comprehensive macroeconomic and structural reforms needed to kick-start recovery and ease financing strains.
The dissolution robs the Islamists of their commanding position gained in elections earlier this year. The Muslim Brotherhood is keen to see the repeat of the success of its candidate in the presidential vote scheduled for Saturday and Sunday's presidential run-off vote.
The vote would see Mubarak's last prime minister Ahmed Shafik take on Muslim Brotherhood candidate Mohamed Mursi.