Too many zimmer frames = worse credit ratings

Aging populations are putting government’s credit ratings at risk, reports the Financial Times. Higher interest rates are exacerbating already increasing pension and healthcare costs in developing countries as populations age — leading all three major credit rating agencies to warn that without sweeping reforms, governments can expect downgrades. Moody’s, S&P and Fitch have all said that countries including the US, EU, and Japan are in danger of downgrades as the cost of borrowing rises — potentially putting them in a “vicious cycle” of borrowing more at higher rates.

S&P expects that roughly half of the world’s largest economies will have been downgraded to junk by 2060, up from a current level of around a third, if they can’t reduce the costs associated with aging demographics, the FT reported. The rating agency estimated that the typical government would run a deficit of 9.1% of GDP by 2060 — up from a projected 2.4% in 2025 — as spending on pensions and healthcare rises. “The longer governments defer action, then the more painful that action will be,” said Edward Parker, global head of research for sovereigns and supranationals at Fitch.

THE CLOSING BELL-

The EGX30 fell 1.1% at yesterday’s close on turnover of EGP 1.92 bn. Foreign investors were net sellers. The index is up 15.4% YTD.

In the green: Taaleem Management Services (+2.1%), Orascom Construction (+1.3%) and Telecom Egypt (+1.2%).

In the red: Oriental Weavers (-6.8%), Sidi Kerir Petrochemicals (-6.8%) and Ezz Steel

Asian markets are up/down in early trading this morning and futures suggest xx