Moody's Drops Egypt's Rating to B3

Egyptians pass in front of an exchange office with a banner of foreign currencies (AP)
Egyptians pass in front of an exchange office with a banner of foreign currencies (AP)
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Moody's Drops Egypt's Rating to B3

Egyptians pass in front of an exchange office with a banner of foreign currencies (AP)
Egyptians pass in front of an exchange office with a banner of foreign currencies (AP)

Egypt's dollar-denominated government bonds fell after Moody's cut the country's credit rating from B2 to B3 late Tuesday.

The agency changed its outlook for Egypt to be stable from negative.

Egypt has continued to face a shortage of foreign exchange, despite allowing the Egyptian pound to depreciate sharply in the past few months.

It is expected that the country's headline inflation will accelerate further in January after surging to its highest level in five years last December, according to a Reuters poll.

The bonds dropped as much as 1.2 cents in the dollar, with the 2029 maturity falling the most to 81.233 cents at 08.45 GMT, according to Tradeweb data.

Egypt's net foreign reserves rose to $34.224 billion in January from $34.003 billion in December, according to the Central Bank.

On Monday, Egypt sold $1.06 billion in one-year dollar T-bills in an auction at an average yield of 4.9%, the central bank said.

Meanwhile, the Egyptian Ministry of Finance issued a statement responding to Moody's concerns.

Finance Minister Mohamed Maait confirmed that the government dealt positively with the concerns contained in Moody's report, despite integrated measures, policies, and measures taken by the government.

The minister pointed out that Standard & Poor's fixed Egypt's credit rating with a stable future outlook, especially in light of the commitment to the economic reform supported by the International Monetary Fund (IMF) with an agreement that extends to 48 months.

It would allow for economic growth prospects during the coming period and enhance the ability to obtain adequate financing to meet the country's external needs.

Maait explained that Egypt is implementing a national program for economic reform to ensure stable economic conditions, maintain financial discipline, and increase the competitiveness of the Egyptian economy.

The program complements what has been achieved in the past years, including the fiscal year 21-22, where the total deficit reached 6.1 percent of GDP, down from 6.8 percent in the year 20-21, and a primary surplus for the fifth year in a row amounted to 1.3 percent of GDP, in the fiscal year 21-22.

Moody's report indicates the possibility of raising Egypt's credit rating through the Egyptian state's implementation of reforms related to enhancing the economy's competitiveness and foreign direct investment flows.



4 Factors Behind the Decline of Saudi Stock Market in H1 2025

Two investors monitor the trading screen in the Saudi financial market in Riyadh (AFP) 
Two investors monitor the trading screen in the Saudi financial market in Riyadh (AFP) 
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4 Factors Behind the Decline of Saudi Stock Market in H1 2025

Two investors monitor the trading screen in the Saudi financial market in Riyadh (AFP) 
Two investors monitor the trading screen in the Saudi financial market in Riyadh (AFP) 

Financial analysts and market specialists have identified four main factors driving the decline of the Saudi stock market during the first half of 2025. Speaking to Asharq Al-Awsat, they pointed to heightened geopolitical tensions in the region, ongoing trade disputes and tariffs between the United States, China, and Europe, oil price volatility, and persistently high interest rates. Collectively, these pressures have squeezed liquidity and weighed heavily on market performance.

Despite the downturn, analysts expect the market to gradually recover over the second half of the year, supported by potential global interest rate cuts, stabilizing oil prices, easing economic uncertainty, and forecasts of robust growth in Saudi Arabia’s GDP and the non-oil sector, alongside continued government spending on major projects.

The Saudi stock market recorded notable losses in the first six months of 2025, with the benchmark index retreating 7.25%, shedding 872 points to close at 11,163, compared to 12,036 at the end of 2024. Market capitalization plunged by around $266 billion (SAR 1.07 trillion), bringing the total value of listed shares to SAR 9.1 trillion.

Seventeen sectors posted declines during this period, led by utilities, which plummeted nearly 32%. The energy sector fell 13%, and basic materials dropped 8%. In contrast, telecom stocks advanced around 7%, while the banking sector eked out a marginal 0.05% gain.

Dr. Suleiman Al-Humaid Al-Khalidi, a financial analyst and member of the Saudi Economic Association, described the first-half performance as marked by significant swings. “The index rose to 12,500 points, only to lose nearly 2,000 points before recovering to about 11,260,” he said.

He attributed the volatility to several factors: regional geopolitical strains, oil prices dipping to $56 a barrel, and high interest rates, which constrained liquidity. He noted that financing costs for traders now range between 7.5% and 9%, historically elevated levels.

“The Saudi market posted the steepest decline among regional exchanges despite record banking sector profits, which failed to translate into stronger overall index performance,” he observed.

Looking ahead, Al-Khalidi anticipates three interest rate cuts totaling 0.75 percentage points by next year, which would bring rates down to about 3.75%. “That should encourage a recovery in trading activity, improve liquidity, and support an upward trend in the index toward 12,000 points, potentially reaching 13,500 if momentum builds,” he added.

Meanwhile, Mohamed Hamdy Omar, economic analyst and CEO of G-World, described the downturn as largely expected, citing external pressures and prolonged trade tensions between the US, China, and Europe. “Retaliatory tariffs dampened investor confidence globally, and Saudi Arabia was no exception,” he said.

Lower oil revenues also strained state finances, leading to a budget deficit of SAR 58.7 billion in the first quarter, further tightening liquidity. Trading volumes fell over 30% year-on-year.

Omar pointed out that changes to land tax regulations and heightened regional security risks also weighed on sentiment. Nonetheless, he expects gradual improvement in the second half of 2025, driven by anticipated rate cuts, rebounding oil prices, and continued large-scale public investments.

He stressed the need for vigilance: “Saudi Arabia remains among the most stable markets, thanks to proactive regulation and policies designed to attract foreign capital and bolster investor confidence.”