Ahmed Feteha Cairo
EGYPT had its credit rating raised at Moody’s Investors Service for the first time in more than two years, citing political stability and an improved business environment.
Moody’s raised Egypt’s issuer and unsecured bond ratings one level from Caa1 to B3, six levels below investment grade. The company said it expected the Egyptian economy to grow by 4.5 percent in the current fiscal year that ends in June, largely in line with the government’s forecast.
“This expected level is based on an assumption that domestic political stability will continue, as will improvements in the business environment, which in Moody’s view will be conducive to higher investment levels,” it said in a statement.
Moody’s action follows upgrades from Standard & Poor’s and Fitch Ratings, and comes as Egypt prepares to return to the international bond market for the first time since 2010. The government said on March 26 it had hired seven banks to help sell a $1.5 billion (R17.7bn) bond.
The Egyptian economy is showing signs of recovery after Gulf Arab monarchies extended billions of dollars in aid to help President Abdel-Fattah el-Sisi stabilise the country, which has suffered from political turmoil since the 2011 uprising that toppled Hosni Mubarak. El-Sisi won the presidential election last year after leading the ouster of Islamist president Mohamed Mursi in July 2013.
The rating company also assigned a stable outlook to Egypt, meaning that pressures for a rating downgrade were limited, citing support from Egypt’s oil-rich Gulf allies.
Meanwhile, Egypt’s stocks fell after the finance ministry issued regulations for a capital gains and dividend tax, overshadowing optimism over the rating upgrade.
The EGX 30 index lost as much as 1.9 percent before trading 0.4 percent lower at 8 680.31 points at 11.01am in Cairo. EFG-Hermes Holding, the largest independent Arab investment bank, led the retreat with a 0.5 percent decline. – Bloomberg