EGYPT. "Since the beginning of the popular uprising in Egypt in January 2011, we have lowered our ratings on Egyptian banks by up to four notches and maintained a negative outlook on these banks," said Standard & Poor's Ratings Services in a credit FAQ "Why We Lowered The Ratings On Egyptian Banks And What Risks Lie Ahead," published May 14, 2012.
The negative rating actions on Egyptian banks mainly reflect S&P's successive downgrades of Egypt (Arab Republic of Egypt; foreign currency B/Negative/B,local currency B/Negative/B) during the period.
"Egyptian banks' credit exposure to domestic sovereign debt has increased at a time when Egypt's creditworthiness has deteriorated markedly," said Standard & Poor's credit analyst Nicolas Hardy.
"Apart from sovereign credit risk, we expect that the banks will likely confront toughening operating conditions in the coming months, possibly prompting a drop in asset quality."