Moody’s Downgrades Credit Ratings of Five Major Egyptian Banks to CAA1, B3Source: www.export-egypt.com 10/11/2023, Location: Africa |
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Major credit rating agency Moody’s downgraded the ratings of five key Egyptian state-owned and private banks to CAA1 and B3.
Moody’s downgraded the state-owned National Bank of Egypt (NBE), Banque Misr, and Banque Du Caire to CAA1 from B3, Reuters reported . The credit rating agency also downgraded Commercial International Bank (CIB), the largest private bank in Egypt, to CAA1 from B3. Moreover, Moody’s downgraded the Bank of Alexandria to B3 from B2. Italian banking group Intesa Sanpaolo owns 80 percent of the bank, and the Egyptian government owns the other 20 percent. The agency warned that these banks’ earnings and capital assets could fail to meet their foreign currency liabilities, according to Reuters. Egypt is facing a severe foreign currency shortage that forced its central bank to instruct several local banks to suspend hard currency cash withdrawals and purchases made abroad using debit cards. Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva stated last week that Egypt will bleed precious reserves unless it devalues its currency again, hailing the steps taken by Egypt to boost its suffering economy. “Egypt should negotiate to reschedule its debt payment with its debtors to build enough reserves to manage the devaluation of its currency,” banking expert Mohamed El-Beih told Ahram Online. “The Central Bank of Egypt (CBE) needs up to $5 billion in soft loans to combat any speculations on the pound and maintain stability in the exchange market,” El-Beih added. “In the long term, the Egyptian government should take measures to boost investments and reassure international investors that they can transfer their earnings and financial assets outside Egypt,” he suggested. With a total external debt of $165.3 billion, Egypt has to pay $71.6 billion in debt service in the coming three years, including $29.23 billion in 2024. Egypt’s foreign asset deficit amounted to nearly $25.92 billion in August.The country seeks to collect $191 billion in annual US dollar revenues by 2026. The Egyptian government plans to attract $5 billion from offering power plants and state-owned companies from October 2023 until June 2024. Last week, Moody's downgraded Egypt’s sovereign credit rating from B3 to Caa1, changing the outlook from negative to stable. The decision was attributed to the foreign currency shortage in the face of increasing external debt service payments over the next two years. Egypt is currently under review for the loan agreement with the IMF. However, the deal is facing challenges as the completion of the first review, initially scheduled for 15 March, has yet to conclude. |
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