Egypt was downgraded to B from B+ by Fitch with a negative outlook. Fitch attributes the rating action to multiple factors. It cites increased external financing risk given high external financing requirements and constrained external financing conditions. They also note that Egypt has seen an incomplete transition to a flexible exchange rate adding that the Egyptian pound is down ~ 50% vs, the beginning of 2022. Egypt has external debt maturities of $7.2bn in FY24, higher than the $4.3bn due in FY23. Of this, $2.1bn is in the form of dollar bond maturities vs. $800mn due in FY23. Fitch also adds that Egypt’s external liquidity buffers are weak and that gross reserves have only slightly recovered to $34.4bn as of March 2023. The rating agency forecasts government debt to increase to 96.7% of GDP in FY23, from 86.6% in FY22.

Egypt’s dollar bonds were trading steady with its 2031s and 2033s at 51-51 cents on the dollar.

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