Moody's drops Egypt bonds

Moody's Investors Service said it downgraded Egypt's government bond ratings to Ba2 from Ba1.

The outlook was change to negative from stable.

The downgrades were prompted by the recent significant rise in political event risk and concern that the policy response could undermine Egypt's already weak public finances, Moody's said.

The agency also said it downgraded the country ceiling for foreign-currency bonds to Baa3 from Baa2 and the country ceiling for foreign-currency bank deposits to Ba3 from Ba2. The short-term country ceiling for foreign-currency bonds was downgraded to prime-3 from prime-2. The local-currency ceilings were downgraded to Baa1 from A3.

Moody's noted that Egypt suffers from deep-seated political and socio-economic challenges. These include a chronic high rate of unemployment, elevated inflation and widespread poverty, the agency said.

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