Morning Commentary: Tunisia spreads wider after rating downgrades; Egypt flat; primary quiet

By Rebecca Melvin

New York, Aug. 21 – Spreads widened on Tunisia’s bonds on Monday after a Moody’s Investors Service rating downgrade. But the spreads of Azerbaijan and Egypt were little changed after Moody’s downgraded the first and affirmed the second, said a trader, who covers the Central & Eastern Europe, Middle East and Africa region.

Tunisia’s bonds were about 12 basis points to 14 bps wider after Moody’s downgraded the long-term issuer rating of the government to B1 from Ba3 and maintained a negative outlook. The Friday downgrade cited continued structural deterioration of fiscal strength, external imbalances and reduced institutional strength and government effectiveness amid delays of IMF-agreed reforms.

The agency also downgraded the foreign currency debt rating of the Central Bank of Tunisia to B1 from Ba3.

Azerbaijan’s 2024 notes were little changed at 101.50 bid, 102.25 offered after the rating agency cut that sovereign’s rating to Ba2 from Ba1, citing increased government debt among other things.

Egypt’s debt was little changed to slightly tighter after the country was affirmed by Moody’s at B3 with a stable outlook. The rating agency noted that government finances are still weak, but it recognized “impressive” reform progress. However, further visibility is limited by uncertainty around the country’s May 2018 presidential elections.

The CEEMEA primary market was silent as the slow summer season continued. Some market players were looking ahead to potential issuance next week following a U.K. bank holiday on Monday.

© 2015 Prospect News.
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