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S&P place Egypt’s rating on CreditWatch negative

President-elect Mohamed Morsi speaks during his first televised address to the Egypt in this still image from a video, on June 24, 2012.

Egypt TV via REUTERS TV/Reuters

Ratings agency Standard & Poor's placed Egypt's long-term sovereign ratings on CreditWatch negative on Monday, citing worries about the transition from the previously deposed authoritarian regime.

"In Egypt, the Supreme Council of the Armed Forces has recently taken steps to consolidate its position of power, a move opposed by other political groups," S&P noted in a statement. The agency rates the country as B.

"We now believe that a protracted, and possibly volatile, transition from the authoritarian regime deposed in January 2011 is more likely," the statement added.

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Moody's Investors Service rates Egypt B2 while Fitch rates Egypt B-plus.

Islamist Mohamed Morsi was declared Egypt's first freely elected president on Sunday, sparking joy among his Muslim Brotherhood supporters, who vowed to wrest more power from armed forces reluctant to cede ultimate control.

The election decision ended a week of disputes over the count in the poll to replace Hosni Mubarak, pushed aside by his fellow officers 16 months ago to appease the Arab Spring revolution.

"The CreditWatch placement reflects our view that we may lower the long-term ratings over the next three months if, among other factors, we think Egypt's main political factions are unwilling or unable to compromise sufficiently on political decisions that would reduce pressures on fiscal and external indicators," S&P said.

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