The political unrest spreading across the Middle East following the revolts in Tunisia and Egypt has dealt a major blow to the creditworthiness of countries across the region, according to an Institutional Investor snap poll of economists and risk analysts.
Egypt’s rating plunges to 37.4 in the snap poll, down from 51.1 in II’s most recent semiannual Country Credit survey, while Libya’s rating drops to 40.0 from 54.6. (Countries are rated on a scale of zero to 100.) Ratings on both countries had been little changed in the regular survey, which was based on analyst estimates made at the end of 2010. II conducted the snap poll in late February, after a political uprising forced President Hosni Mubarak to step down in Egypt.
A majority of poll respondents say the regime change is somewhat or highly likely in the next two to three years in eight of 15 countries in the Middle East and North Africa, led by Yemen and Libya. Most respondents consider regime change unlikely or very likely in the Gulf states of Qatar, Saudi Arabia and the United Arab Emirates.
About one quarter of respondents say regime change is likely to be somewhat positive for Egypt’s creditworthiness over the longer term, while half of respondents believe it will be somewhat negative or very negative. If regime change were to take place elsewhere, analyst express a rosier view of the likely impact in countries such as Iran, Libya and Syria, but say it would be negative in Qatar, Saudi Arabia and the UAE.
