CAIRO: Standard and Poor's Tuesday downgraded its rating on Egypt and warned that another cut was possible as a week of protests demanding the ouster of the president crippled the nation, ground its economy to a virtual standstill and battered its currency. S&P became the third international ratings agency in under a week to downgrade Egypt because of the unrest that has gripped the Arab world's most populous nation. Egypt's long-term foreign currency sovereign rating was lowered to BB from BB+, S&P said. The cuts still left the rating within the investment grade category, but reflected the increasing alarm with which investors are viewing the developments in Egypt. S&P warned that it could issue another downgrade - possibly by more than one notch - within the next three months. "The rating actions reflect our expectation that the violent demonstrations of the past week will persist, despite the appointment of a vice president and the dismissal of the government by President Hosni Mubarak," said S and amp;P credit analyst Kai Stukenbrock. The agency also said it believed the rating downgrade could have a negative impact on the creditworthiness of two of Egypt's biggest banks, the National Bank of Egypt and Commercial International bank. The Egyptian pound was trading at about 5.85 pounds to the US dollar by early Tuesday afternoon, rebounding slightly from a roughly four-and-a-half year low. Forward spreads widened sharply over the early days of the crisis before easing up by Tuesday and the impact was palpable on other regional currencies, at least temporarily, before the forward spreads narrowed. For Egypt, the S&P downgrade was the latest blow in a week where there was little to cheer about in the economy.
