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Egypt pays record borrowing costs as S&P cuts rating

DUBAI - Egypt paid record borrowing costs and missed its Treasury-bill fund-raising target as deadly clashes this week prompted Standard & Poor’s to cut its credit rating for a fourth time this year.

The Arab country’s credit worthiness was lowered one level to B+, four levels below investment grade, the rating company said, signalling another possible cut. The Finance Ministry raised 2.17 billion pounds ($362 million) of the targeted 5.5 billion pounds on Thursday. The average yield on six-month notes jumped 42 basis points to 14.4 per cent, the highest level since Bloomberg started tracking the data in 2006. The ministry sold one-year notes at a record yield of 14.932 per cent.

Concern that clashes between police and protesters seeking an end to military rule could deplete Egypt’s international reserves, already at their lowest level in six years, sent 12- month pound non-deliverable forwards to 7.2250 a dollar. That reflects bets for the currency to fall from 6.0030 over the life of the contracts. The violence forced the government to quit days after Finance Minister Hazem El Beblawi said he may ask the International Monetary Fund for a $3 billion loan.