S&P Downgrades Egypt (EGPT)

Standard & Poor’s may be doing something that feels insensitive, but how can you blame them after everything you have seen in the news.  The credit ratings agency has downgraded Egypt.  The long-term credit ratings were cut to “B” and the out outlook is unfortunately Negative.  That implies another downgrade is possible or even likely ahead.  S&P cited ongoing political uncertainty that is gripping the nation and also the sharp decline in the foreign exchange reserves.  The nation also faces a weakening of its sovereign flexibility policy, and that might remind you of something similar to an Island in the Mediterranean which is a member of the PIIGS.  The nations financing risks have now risen substantially. 

The Market Vectors Egypt Index ETF (NASDAQ: EGPT) is the only direct Egypt ETF or Fund and it has not yet started to indicate its price.  At a close of $12.20 on Thursday, the 52-week trading range is $9.24 to $19.78. 

Egypt is rapidly looking like it is no better off than it was before.  In fact, it looks much worse now from an outsider’s point of view.

JON C. OGG