Fitch Ratings has downgraded the credit ratings of four major Egyptian banks a week after it cut the country’s sovereign credit rating deeper into junk territory. The agency cut the ratings of Banque Misr, National Bank of Egypt, CIB, and Banque du Caire to B- from B, reflecting the impact of the government’s credit profile on the lenders, it said yesterday.

The rationale: Each of the banks hold sizable amounts of government debt on their books and have lent significant sums to public-sector companies, exposing them to the elevated default risk of the government. Economic conditions, including the FX shortage, heightened inflation, and geopolitical uncertainties, also weighed on the banks’ ratings, Fitch said.

BACKGROUND- Fitch lowered our credit rating to B- from B earlier this month on concerns about the sustainability of government debt, becoming the third major rating agency to do so since October. Moody’s and S&P Global Ratings both lowered their ratings in October.

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