The local-currency deposit ratings of five Egyptian banks have been downgraded by Moody’s Investors Service, Ahram Online reported Wednesday.
The National Bank of Egypt was downgraded to Caa1 from B3, Banque du Caire to Caa1 from B3, Banque Misr to Caa1 from B3, Commercial International Bank to Caa1 from B3, and Bank of Alexandria to B2 from B3.
The move came after the credit-rating agency downgraded Egypt’s sovereign rating to Caa1, indicating “poor quality” and “very high credit risk.” The chance of a default on foreign debts within five years is 40 percent, the agency estimated.
Investors are awaiting official approval of a $4.8 billion loan from the International Monetary Fund, with observers blaming Egypt’s ongoing political instability for the delay.
The country’s $13 billion in foreign reserves is hardly enough to cover the cost of three months of imports.
Improvement in Egypt’s sovereign credit risk profile and operating environment could help upgrade the country’s bank ratings, Moody’s said.