{"id":609817,"date":"2023-11-10T00:00:00","date_gmt":"2023-11-10T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/11\/10\/this-weekend-fitch-downgrades-egypts-sovereign-credit-rating-again-death-toll-rises-in-palestine-with-10-6k-dead\/"},"modified":"2023-11-10T00:00:00","modified_gmt":"2023-11-10T00:00:00","slug":"this-weekend-fitch-downgrades-egypts-sovereign-credit-rating-again-death-toll-rises-in-palestine-with-10-6k-dead","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/11\/10\/this-weekend-fitch-downgrades-egypts-sovereign-credit-rating-again-death-toll-rises-in-palestine-with-10-6k-dead\/","title":{"rendered":"THIS WEEKEND: Fitch downgrades Egypt\u2019s sovereign credit rating, again + Death toll rises in Palestine with 10.6k dead"},"content":{"rendered":"

Good morning friends and we wish you a very happy Friday. <\/strong>We have a packed issue with several economic updates, a smattering of privatization news, and some energy developments. <\/p>\n

Therapy isn\u2019t as taboo as it once was \u2014 especially if you know how to approach it. <\/strong>In fact, today our mental well-being accounts to our own physical and emotional wellness and contributes immensely to our longevity, as well. <\/p>\n

And with that said, we are sharing a list of venues to visit if you want to see a therapist. <\/strong>Whether you are dealing with a one-off issue or have a lot of knots to unravel, we hope that you find a safe starting point from our list below. <\/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

Israel\u2019s ruthless assault on Gaza entered its fifth week and claimed the lives of over 10k <\/strong>Palestinians<\/strong>, according to Palestinian Health Ministry records. The IDF\u2019s aerial bombing campaign continued to exact an enormous toll on civilians and infrastructure in the territory, while ground forces pushed deeper into Gaza.<\/p>\n

In business news, we had a smattering of energy, privatization, and macro updates this <\/strong>week: <\/strong>We had the usual economic data points that come with the start of a new month, as non-oil private sector performance indicators pointed to a continued contraction at the same time as yet another credit ratings agency slashed our sovereign credit rating. <\/p>\n

On the privatization front, Heliopolis Housing and Development could be up for grabs<\/strong> and ADQ might be in the running for a stake in another state-owned enterprise.<\/strong> Fresh energy investments and news of increased gas supply reaching our shores also rounded out a busy week.<\/p>\n

ISRAEL\u2019S WAR ON GAZA-<\/strong><\/p>\n

Last weekend, Israel carried out attacks all over Gaza, killing more innocent civilians and <\/strong>destroying homes.<\/strong>Israel attacked<\/a> an ambulance convoy outside of Al Shifa hospital, two refugee camps, four UN schools providing shelter for refugees, the AFP\u2019s Gaza bureau, and the French Institute in Gaza.<\/p>\n

Ground forces <\/strong>entered Gaza City<\/a><\/strong> on Tuesday <\/strong>in what the Israeli Defense Forces are portraying as an operation aimed at destroying Hamas\u2019 tunnels, eliminating ammo dumps, and killing its senior commanders.<\/p>\n

US Secretary of State Antony Blinken ended three days of diplomacy in the region no <\/strong>closer to a consensus<\/strong> about the best way forward in Israel\u2019s brutal war on Gaza. <\/p>\n

If Israel defeats Hamas, the occupation forces could be back on the ground in Gaza <\/strong>full-time:<\/strong> \u201cIsrael will for an indefinite period\u201d have overall security responsibility for Gaza following the war, Netanyahu said. The White House has since opposed<\/a> this course of action, with Blinken reiterating its position<\/a> that the Palestinian Authority should be handed control of Gaza should Hamas be defeated. <\/p>\n

The death toll from Israeli strikes in <\/strong>Gaza <\/strong>has reached over 10.6k<\/a><\/strong>,<\/a><\/strong> including over 4k children. <\/p>\n

So far, 569 trucks have entered Gaza since October 7<\/strong>. <\/strong>500 trucks entered the strip every day prior to the war.<\/p>\n

Over 500k Palestinians in north Gaza are \u201con the brink of starvation\u201d<\/strong> due to Israel\u2019s siege, according to Action Aid<\/a>.<\/p>\n

More than 1k foreigners and 84 injured Gazans crossed the Rafah border crossing into <\/strong>Egypt between Wednesday and Friday last week<\/strong>, the Wall Street Journal<\/a> reported on Sunday, citing Egyptian officials..<\/p>\n

Tens of foreign nationals left Gaza on Monday after border authorities reopened the <\/strong>Rafah crossing<\/strong> following a two-day suspension. <\/p>\n

And some 500+ foreign nationals and dual citizens were evacuated from Gaza<\/strong> on Tuesday into Egypt. <\/p>\n

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

#1- Fitch Ratings downgraded our sovereign credit rating deeper into junk on Friday<\/strong>. The ratings agency cut our credit rating<\/a> to B- from B due to \u201cincreased risks to external financing, macroeconomic stability and the trajectory of already-high government debt,\u201d in addition to slow progress on reforms and FX constraints.<\/p>\n

#2- The contraction in our non-oil private sector deepened in October<\/strong>, with S&P Global\u2019s<\/a>latest PMI index<\/a> reaching 47.9, down from 48.7 in September. The index posted its \u201csharpest deterioration\u201d in five months due to rising prices and the ongoing FX shortage.<\/p>\n

#3- Net foreign reserves were more or less flat at <\/strong>USD 35.1 bn<\/a><\/strong> at the end of October <\/strong>compared to USD 34.97 bn at the end of September.<\/p>\n

#4- Economic growth almost halved to <\/strong>3.8% in FY 2022-23<\/a><\/strong> from 6.6% the year prior<\/strong> due to the effects of the war in Ukraine on supply chains and the \u201cexacerbation of the external debt crisis in emerging markets and developing countries.\u201d <\/p>\n

#5-<\/strong> On a more positive note, getting through our FX crunch could be within reach. <\/strong>That\u2019s according to a research note<\/a> to clients by EFG Hermes lead MENA economist Mohamed Abu Basha, which estimates that we need a foreign currency liquidity buffer of between USD 8-10 bn to get through the FX crunch and go ahead with a successful float in the coming months. EFG Hermes believes the Madbouly government will be able to bring in that money from a combination of privatization, debt, and state revenues. <\/p>\n

CHANGES TO THE <\/strong>BUDGET-<\/strong><\/p>\n

Ministers <\/strong>approved in principle<\/a><\/strong> fresh cuts to government spending <\/strong>through the end of the current fiscal year due to the ongoing FX crunch. New projects that require FX and are yet to begin and any spending that fails to qualify as \u201cextremely necessary,\u201d will be delayed.<\/p>\n

A COUPLE OF ENERGY UPDATES-<\/strong><\/p>\n

#1- Israeli gas imports <\/strong>picked up<\/a><\/strong> last week to 250 mn cubic feet per day<\/strong> after a sudden slump in supply following the outbreak of the war on Gaza. Separate reports put that figure at 350 mn cubic feet per day.<\/p>\n

#2-<\/strong>The government has reportedly <\/strong>increased gas supplies<\/a><\/strong> earmarked for fertilizer <\/strong>companies<\/strong>, reversing a 30% supply cut introduced last week following a sharp downturn in imports of natural gas from Israel.<\/p>\n

#3- Vestas\u2019 250 MW Suez wind farm is due to link up with the grid next month:<\/strong> The wind farm, in the works since 2020, will be handed over<\/a> to the New and Renewable Energy Authority by mid-December.<\/p>\n

#4<\/strong>- Cheiron\u2019s Pico Petroleum and the Kuwait Foreign Petroleum Exploration Company <\/strong>(Kufpec) <\/strong>will invest USD 119.5 mn<\/a><\/strong> over the next five years to increase production at the Geisum and Tawila West concession in the Gulf of Suez. <\/p>\n

#5-<\/strong>Acwa Power and Hassan Allam are going to start building the region\u2019s largest wind <\/strong>farm in 2024: <\/strong>The partners expect to break ground<\/a> on the USD 1.5 bn, 1.1 GW wind farm in the Gulf of Suez \u2014 the largest of its kind in the Middle East \u2014 early next year. <\/p>\n

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

#1- ADQ might have an EgyptAlum acquisition in the pipeline:<\/strong> Abu Dhabi\u2019s wealth fund ADQ is reportedly mulling<\/a> over acquiring up to a 30% stake in EGX-listed Egypt Aluminum (EgyptAlum) from the Holding Company for Metallurgical Industries, which holds an 89.8% stake in the company. <\/p>\n

ADQ might have competition:<\/strong> While ADQ has not made an official offer, other Gulf entities and Qatar are interested in snapping up a portion of the company.<\/p>\n

#2- The government is considering selling a stake in Heliopolis Housing and <\/strong>Development <\/strong>and has hired NI Capital to offer a valuation ahead of a potential sale<\/a>. Local and Gulf investors have previously shown interest in the company, which the government reportedly considers one of the easiest state-owned firms to exit.<\/p>\n

#3- Private-sector players could soon <\/strong>manage the nation\u2019s airports<\/a><\/strong>, as the government prepares to invite private companies to submit bids for management rights, Prime Minister Moustafa Madbouly said this week. Operation and management of seaports, dry ports, and public transport lines could soon be up for tender as well.<\/p>\n

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

#1- Our second samurai bond issuance hit the Japanese market: <\/strong>Egypt raised JPY 75 bn<\/a>(c. USD 500 mn<\/a>) in a JPY-denominated bond sale in Japan, marking the country\u2019s second samurai bond sale. <\/p>\n

#2- Orascom Real Estate (ORE) lined up <\/strong>EGP 6 bn<\/a><\/strong> to fast-track construction at its O West project in Sixth of October.<\/p>\n

#3- The Arab African International Bank (AAIB) extended <\/strong>a EGP 3.5 bn facility<\/a><\/strong> to Tatweer <\/strong>Misr<\/strong> to accelerate the construction of its Il Monte Galala project in Ain Sokhna and Bloomfields in Mostakbal City.<\/p>\n

#4- United Bank\u2019s financing arm United Finance raised <\/strong>EGP 617.5 mn<\/a><\/strong> in a securitized <\/strong>bond issuance.<\/strong> The bond was backed by a EGP 993 mn portfolio of leasing contracts.<\/p>\n

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

Cigarette tax hike was signed into law: <\/strong>The new VAT law on cigarettes, which adds EGP 0.50 to all tobacco products including heated tobacco products and liquid tobacco, was passed into law this week<\/a>.<\/p>\n

AND<\/strong>- Eastern Tobacco followed up with a price hike:<\/strong> State-owned tobacco giant Eastern Company published a new price list<\/a> for its tobacco products starting yesterday that raises prices between 12% and 33% following the new VAT amendments. <\/p>\n

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

Egypt is <\/strong>on track to meet<\/a><\/strong> its target of attracting 15 mn tourists this year despite the <\/strong>impact of the war in Gaza.<\/strong> Less than 10% of bookings have been canceled since the war started more than four weeks ago, and tourist numbers were up 7% y-o-y in October.<\/p>\n

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

<\/p>\n

The Arab League is getting together tomorrow for <\/strong>an emergency meeting<\/a><\/strong> in Riyadh called for by Palestinian President Mahmoud Abbas. The league\u2019s main goal at the moment is to establish a ceasefire in Gaza. <\/p>\n

The Organization of Islamic Cooperation meets on Sunday, 12 November <\/strong>in Riyadh for an extraordinary meeting<\/a> \u201cto discuss the brutal Israeli aggression against the Palestinian people.\u201d<\/p>\n

The House of Representatives reconvenes Sunday, 12 November. <\/strong><\/p>\n

Deadline for technical and financial offers for <\/strong>Misr Aluminum Company rehabilitation<\/a><\/strong>project<\/a><\/strong> elapses on Sunday, 12 November<\/strong> after being extended from the previous deadline of 12 October.<\/p>\n

Destination Africa<\/a><\/strong> takes place next Tuesday and Wednesday, 14-15 November<\/strong> at the Royal Maxim Palace Kempinski Hotel.<\/p>\n

Egypt VC Summit<\/a><\/strong> also runs on Tuesday and Wednesday<\/strong>at the Conrad Hotel.<\/p>\n

The deadline for the mandatory tender offer to buy back <\/strong>Dice Sports and Casual Wear\u2019s<\/a><\/strong>46.9% stake<\/strong> elapses on Wednesday, 15 November.<\/p>\n

Cairo International Film Festival<\/a><\/strong> kicks off on Wednesday, 15 November<\/strong> and runs through Friday, 24 November.<\/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