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31 January 2011
Last updated at 07:02 ET
Ratings agency Moody's has cut its debt rating for Egypt, and changed its outlook from stable to negative.
Moody's said the cut was "prompted by the recent significant rise in political event risk and concern that the policy response could undermine Egypt's already weak public finances".
It has downgraded the country's debt rating one notch from Ba1 to Ba2.
Thousands of Egyptian protesters have taken to the streets, calling for President Hosni Mubarak to step down.
On Friday, Fitch also downgraded its outlook on Egypt from stable to negative, citing the political unrest.
"Finally the rating agencies wake up. Egypt rated flat with Turkey was always a joke," said RBS analyst Timothy Ash.
Rising concerns The anti-government protests have been largely driven by public anger at rising prices, unemployment, and accusations of corruption and lack of democracy.
The Moody's downgrade reflects growing unease among ratings agencies at the impact of political tensions across parts of North Africa and the Middle East.
The unrest in Egypt follows the uprising in Tunisia, which ousted President Zine al-Abidine Ben Ali.
Last week, Standard & Poor's also named Algeria and Jordan as being vulnerable to unrest similar to that seen in Tunisia, saying the political uncertainty weighed on their sovereign ratings.
Concerns that the unrest in Egypt could spread also knocked European stock markets, with shares in airlines and travel operators taking a hit.
In London, shares in Thomas Cook fell 4.7%, Thomson Holidays owner TUI Travel shed 2.7%, while the new BA/Iberia airline group IAG dropped 2.6%.
Shares in German carrier Lufthansa were down 1.9%.
The Cairo Stock Exchange itself was closed for the third straight day.
Suez fears Meanwhile, oil prices fell back on Monday after the head of the oil producers' group Opec said he did not expect the turmoil in Egypt to affect the Suez Canal.
Oil prices had been pushed higher by fears that supplies could be disrupted if the protests led to the closure of the canal, which connects Europe and Asia.
But a canal official told state media that the waterway was functioning at full capacity.
US crude initially rose 33 cents to $89.67 a barrel before falling back to $89.22, while London Brent dropped to $98.61 a barrel after nearing the $100 mark.
More than 4 million barrels of crude oil a day are shipped through the canal or an adjacent pipeline.
On Friday, shares in shipping companies rose, when worries over the Suez Canal began to emerge.
Its closure would mean ships would have to travel around the southern tip of Africa, adding thousands of miles to their journeys, and traders speculated that the tanker owners would be able charge accordingly.
Shares in Frontline, one of the world's largest oil tanker operators, ended Friday 7.7% higher on the New York Stock Exchange.
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Moody's said the cut was "prompted by the recent significant rise in political event risk and concern that the policy response could undermine Egypt's already weak public finances".
It has downgraded the country's debt rating one notch from Ba1 to Ba2.
Thousands of Egyptian protesters have taken to the streets, calling for President Hosni Mubarak to step down.
On Friday, Fitch also downgraded its outlook on Egypt from stable to negative, citing the political unrest.
"Finally the rating agencies wake up. Egypt rated flat with Turkey was always a joke," said RBS analyst Timothy Ash.
Rising concerns The anti-government protests have been largely driven by public anger at rising prices, unemployment, and accusations of corruption and lack of democracy.
The Moody's downgrade reflects growing unease among ratings agencies at the impact of political tensions across parts of North Africa and the Middle East.
The unrest in Egypt follows the uprising in Tunisia, which ousted President Zine al-Abidine Ben Ali.
Last week, Standard & Poor's also named Algeria and Jordan as being vulnerable to unrest similar to that seen in Tunisia, saying the political uncertainty weighed on their sovereign ratings.
Concerns that the unrest in Egypt could spread also knocked European stock markets, with shares in airlines and travel operators taking a hit.
In London, shares in Thomas Cook fell 4.7%, Thomson Holidays owner TUI Travel shed 2.7%, while the new BA/Iberia airline group IAG dropped 2.6%.
Shares in German carrier Lufthansa were down 1.9%.
The Cairo Stock Exchange itself was closed for the third straight day.
Suez fears Meanwhile, oil prices fell back on Monday after the head of the oil producers' group Opec said he did not expect the turmoil in Egypt to affect the Suez Canal.
Oil prices had been pushed higher by fears that supplies could be disrupted if the protests led to the closure of the canal, which connects Europe and Asia.
But a canal official told state media that the waterway was functioning at full capacity.
US crude initially rose 33 cents to $89.67 a barrel before falling back to $89.22, while London Brent dropped to $98.61 a barrel after nearing the $100 mark.
More than 4 million barrels of crude oil a day are shipped through the canal or an adjacent pipeline.
On Friday, shares in shipping companies rose, when worries over the Suez Canal began to emerge.
Its closure would mean ships would have to travel around the southern tip of Africa, adding thousands of miles to their journeys, and traders speculated that the tanker owners would be able charge accordingly.
Shares in Frontline, one of the world's largest oil tanker operators, ended Friday 7.7% higher on the New York Stock Exchange.
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