Morgan Stanley (NYSE:MS) has downgraded Egypt's sovereign credit rating, citing several risk factors including an upcoming presidential election, the possibility of a downgrade by Moody's (NYSE:MCO), and complications with a $3 billion International Monetary Fund (IMF) program. This information was shared on Monday.
The financial institution's decision comes amid heightened concerns over Egypt's financing needs, which are estimated to be at $24 billion through June 2024. The country's dollar debt has depreciated by approximately 10% this year.
The impact of the Russian invasion of Ukraine also played a part in the decision as it has negatively influenced sentiment towards riskier assets such as Egypt. Investors are closely watching Egypt’s syndicated loans due in the second half of 2024, which include two facilities totaling $5 billion from UAE banks.
Despite these challenges, there are indicators that Gulf Arab countries may be willing to provide financial support to Egypt. This potential backing could play a crucial role in stabilizing the country's economy amidst its current challenges.
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