Hilbroy Advisory: S&P downgrades Egypt's debt rating and says it could go lower

Montreal, Quebec, February 2, 2011– Hilbroy Advisory Inc.(DeutcheBörse: 2H0) Hilbroy Advisory Reports : Standard & Poor's, the third international ratings agency in under a week to downgrade its rating on Egypt to BB from BB+ and warned that another cut was possible as a week of protests demanding the ouster of the President stalled its economy.

The cuts still left the rating within the investment grade category, but reflected the increasing alarm with which investors are viewing the developments in Egypt. S&P warned that it could issue another downgrade - possibly by more than one notch - within three months.

The agency also believed the rating downgrade could have a negative impact on the creditworthiness of two of Egypt's biggest banks, the National Bank of Egypt and Commercial International bank.

"This is due to the fact that there is more differentiation between the levels of contagion in the Middle East," said John Sfakianakis, chief economist at the Riyadh-based Banque Saudi Fransi-Credit Agricole Group. "Markets are seeing that the contagion ... won't spill to oil-producing countries, particularly Saudi Arabia."

The Saudi riyal is the most actively traded in the region and is used by foreign investors as a hedge against their Egyptian pound exposure.

S&P, echoing its ratings peers, warned that the political instability and unrest will hamper Egypt's economic growth this year, in no small part because of the blow to the tourism sector.

The agency also lowered its long-term and short-term local currency ratings to BB+/B from BBB/A-3, while the short-term foreign currency rating of B was unchanged.

With tourism likely to take a serious hit, the 6 per cent GDP growth figure being projecting for this year seemed now to be wishful thinking. Companies have halted production and others are withdrawing their foreign staff.

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Hilbroy Advisory Inc. is a Canadian based advisory and consultancy services company founded in 2000. Our Company provides publicly traded and private companies, institutions and individuals with a series of advisory services enabling these companies to fully reach their corporate objectives and potential.
Our specialists will customize a service package that includes reviewing, identifying and recommending a series of specific action and tasks that help their clients’ management decisions when seeking
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