{"id":608912,"date":"2023-10-27T00:00:00","date_gmt":"2023-10-27T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/10\/27\/no-ceasefire-in-sight-sp-downgrades-egypts-sovereign-credit-rating-to-b-from-b\/"},"modified":"2023-10-27T00:00:00","modified_gmt":"2023-10-27T00:00:00","slug":"no-ceasefire-in-sight-sp-downgrades-egypts-sovereign-credit-rating-to-b-from-b","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/10\/27\/no-ceasefire-in-sight-sp-downgrades-egypts-sovereign-credit-rating-to-b-from-b\/","title":{"rendered":"No ceasefire in sight + S&P downgrades Egypt\u2019s sovereign credit rating to B- from B."},"content":{"rendered":"

Good morning, friends. We hope this Friday treats you well. <\/strong>Our week\u2019s business news cycle has been bearish as the updates from Gaza have been steering the international conversation every day. Nevertheless, there has been some new economic news, debt updates, and plenty of investment news to keep us moving.<\/p>\n

In case you hit the hay early last night - <\/strong>We went back in time \u2014 just an hour \u2014 while you were asleep. If you haven\u2019t adjusted your clocks, now is the time (no pun intended). <\/p>\n

In times of financial crunches it may seem counterintuitive to spend, even on our homes.<\/strong>However, our guide this week<\/strong> shares brands that offer furniture and home decor at a price tag that can suit every pocket and every style. <\/p>\n

Enterprise Weekend comes out each Friday at 9:00am CLT.<\/strong> We\u2019ll be back on Sunday at 6am with EnterpriseAM. Until then: Enjoy the weekend.<\/p>\n

LAST WEEK IN 3 MINS-<\/strong><\/p>\n

The siege on Gaza by the Israeli forces continues to drive the<\/strong> conversation <\/strong>in the local and international news as it extends into its third week. On the local front, we have had some economic updates and debt agreements that we will be keeping an eye on as they unfold in the coming week.<\/p>\n

THE ISRAELI WAR ON GAZA CONTINUES TO BE THE BIG STORY OF THE WEEK-<\/strong><\/p>\n

Arab leaders <\/strong>condemned Israel\u2019s war against Gaza<\/a><\/strong> during this week\u2019s international summit in Cairo and accused Western countries of selectively applying international law to the conflict. Egypt organized the gathering as part of a drive to get an agreement on a ceasefire and a solution to the Palestinian issue. <\/p>\n

Tens of thousands of Egyptians took to the streets to condemn Israel\u2019s war on Gaza<\/strong>. Demonstrations took place last Friday at 27 state-approved locations around the country as well as downtown Cairo and Al Azhar.<\/p>\n

As of yesterday morning, more than<\/strong>7k Palestinians<\/a><\/strong> have been killed in Gaza over the past 17 days<\/strong>, 2,913 of whom were children. Almost 17k people have been injured, according to Palestinian health ministry.<\/p>\n

\u2026 and nearly two-thirds of Gaza\u2019s population is now homeless:<\/strong> About 1.4 mn Gazans have<\/a>been displaced<\/a> by Israel\u2019s devastating bombing campaign, the UN said Sunday. That\u2019s more than 60% of Gaza\u2019s total population. Almost 600k of these people are sheltering in 150 UNRWA facilities.<\/p>\n

Limited number of trucks carrying vital supplies of aid have begun crossing the border <\/strong>at Rafah on Saturday<\/a>, the first to do so since the 7th of October.<\/p>\n

Still, the US is not willing to consider a ceasefire: <\/strong>We don\u2019t believe that this is the time for a ceasefire,\u201d White House spokesperson John Kirby said this week<\/a>. Western countries have also shown little interest.<\/p>\n

But a \u201chumanitarian pause\u201d might be in the works: <\/strong>Although the US remains firmly opposed to a ceasefire, there are signs it could be pushing Israel for a brief break or slowdown in the brutal bombardment to let more aid into Gaza.<\/p>\n

For the first time, Guterres accused Israel of breaking international law<\/strong>: UN Secretary-General Antonio Guterres accused Israel<\/a> of committing \u201cclear violations\u201d of international law. Guterres also acknowledged the occupation as the root cause of the recent escalation.<\/p>\n

ECONOMY-<\/strong><\/p>\n

S&P Global Ratings downgraded our sovereign credit rating to B-<\/strong>from B<\/strong> on the back of the FX shortage and rising uncertainties about debt sustainability. This followed by another downgrade from S&P to State-owned lenders National Bank of Egypt and Banque du Caire as well as the country\u2019s largest private-sector bank CIB.<\/p>\n

BANKING-<\/strong><\/p>\n

Less restrictions on credit card use abroad:<\/strong>The Central Bank of Egypt will allow credit card users access to their usual FX transaction limits without having to submit proof of travel prior to their trips\u2026<\/p>\n

\u2026however: <\/strong>We still have to provide proof that the card was used outside of Egypt within 90 days of returning, or it would risk being banned from using or receiving credit cards in the future. Proving travel can be done either through arrival and departure stamps on passports or by sending proof of continued residency abroad if the trip exceeds those 90 days. Also, customers will still need to tell their banks\u2019 customer service departments their travel plans before they go.<\/p>\n

DEBT-<\/strong><\/p>\n

Egypt inked a debt swap agreement with China:<\/strong> The International Cooperation Ministry signed a memorandum of understanding<\/a> on a debt swap with the China International Development Cooperation Agency (CIDCA) at the Belt and Road Forum last week. Egypt owed USD 8.2 bn to China as of the end of March \u2014 about 5% of our total external debt.<\/p>\n

PRIVATIZATION<\/strong>-<\/strong><\/p>\n

A unit from the privately held Al Safy Group reportedly <\/strong>expressed interest<\/a><\/strong> in acquiring<\/strong> military-owned bottled water company Safi<\/strong>. The Al Safy Group \u2014 which has no connection to the military-owned firm \u2014 was among the 30 companies that previously expressed their interest in the stake sale.<\/p>\n

ALSO- Agthia has reportedly withdrawn its own bid <\/strong>leaving newcomer Al Safy Group to compete with Mansour Group for the acquisition.<\/p>\n

INVESTMENT-<\/strong><\/p>\n

#1- The Suez Canal Authority signed a <\/strong>USD 1.5 bn joint cooperation memorandum<\/a><\/strong> with <\/strong>Qatari dairy producer Baladna<\/strong> that will be geared towards developing the local dairy production and processing industry. <\/p>\n

#2- We could be seeing a new Beni Suef dry port in the works:<\/strong> Samcrete Holding\u2019s industrial arm, Industrial Development Group (IDG), is in the process of signing an MoU with Alexandria-based logistics company Star Shine Shipping & Logistics (SSSC) to develop and operate a new dry port<\/a> in Kom Abu Radi in Beni Suef. The port could reportedly see USD 500 mn worth of investment.<\/p>\n

#3- Xinxing Cathay International Group wants <\/strong>to invest USD 1.08 bn<\/a><\/strong> in two factories in<\/strong> the Suez Canal Economic Zone (SCZone)<\/strong>. Xinxing initially proposed a USD 2 bn project in March, but the company now plans to build a plant half its original size.<\/p>\n

#4-<\/strong>SBC could invest up to EGP 1 bn in industrial land development: <\/strong>Saudi engineering and construction contractor Saudi Bashayer Company (SBC) i s studying a project<\/a> to develop industrial land in Egypt with an initial investment of up to EGP 1 bn.<\/p>\n

TELECOMS-<\/strong><\/p>\n

5G licenses could soon be up for grabs: <\/strong>The National Telecommunications Regulatory Authority (NTRA) is planning to issue<\/a> a tender for Egypt\u2019s first licenses to provide 5G services as early as December.<\/p>\n

WHAT\u2019S HAPPENING NEXT WEEK-<\/strong><\/p>\n

<\/p>\n

The US Federal Reserve\u2019s Open Market Committee meeting will take place on <\/strong><\/p>\n

31 October-1 November (Tuesday-Wednesday): <\/strong>The Fed is expected<\/a> to keep its benchmark overnight interest rate unchanged at the conclusion of its policy meeting.<\/p>\n

The Central Bank of Egypt\u2019s Monetary Policy Committee meeting is on Thursday, 2 <\/strong>November <\/strong>with its own meeting to review interest rates. The rate review will follow shortly after inflation figures hit another all-time high of 38%<\/a> in September and as a potential IMF review of our USD 3 bn loan program looms on the horizon.<\/p>\n

Fitch is also expected to review Egypt\u2019s sovereign credit rating on Friday, 3 November.<\/strong>Egypt has already seen two downgrades<\/a> from S&P Global and Moody\u2019s this month.<\/p>\n

Check out our full calendar on the web<\/a><\/strong> for a comprehensive listing of upcoming news events, national holidays and news triggers.<\/p>\n

YOUR MOST CLICKED LINKS-<\/strong><\/p>\n