Bond Market News

Egypt was downgraded to B3 from B2 by Moody’s citing “reduced external buffers and shock absorption capacity”. This comes amid a structural change in its economy towards an export and private sector-led growth model under a flexible exchange rate regime. Moody’s said that Egypt’s liquid FX reserves have declined since May 2022 and FX liquidity buffers have “dwindled”, thereby “increasing external vulnerability”. Meanwhile, the rating agency to changed the outlook to stable from negative where downside risks (liquidity, higher cost of funds etc.) are balanced by upside risks of reforms to enhance the export base and support foreign direct investment. The latter would help enhance external debt capacity and sustainably reduce external vulnerability risks.

Egypt’s dollar bonds were trading weaker with its 7.3% 2033 down 1 point to 74.04, yielding 11.61%.