Lebanon is experiencing severe economic problems, and a ratings downgrade and/or a negative outlook like that from Fitch, should come as no surprise. But what do the world's top banks thing? These banks – the ones that Credit Benchmark uses to create its aggregate ratings – clearly felt problems were bad, because the trend for Lebanon's credit risk began moving down at the end of 2018 and has remained weak since.
Lebanon isn't the only country in this region to have worsening sovereign credit risk, seen through weakening credit trends. Charts below show the trend for Bahrain, Oman, and Algeria.
Moody's Credit rating for Egypt is B2 Stable from B3 Positive, but the picture is muddied by security concerns.
Egypt’s GDP growth is projected to increase to 5.5% in fiscal year 2019, as the economy stabilises from structural reforms. Increased natural gas production from the Zohr oil field discovery will also help the country to become self-sufficient in the coming years.
However, economic headwinds exist. Debt, currently at 89.4% of GDP, remains high though sustainable.
Credit Benchmark brings together internal credit risk views from 40+ of the world’s leading financial institutions, whose analysts model risk to understand their own bank’s exposures. The inputs they collect are anonymized, aggregated, and published in the form of consensus ratings to give an independent view of credit quality and provide a rich set of analytics for benchmarking credit risk exposures.