Moody confirms Kenya’s credit outlook at B3 (negative)
2 min read
Global rating company, Moody confirms Kenya's credit outlook as negative after placing the country for further downgrade
Global rating company, Moody confirms Kenya’s credit outlook as negative after placing the country for further downgrade.
Moody’s Investors Service (Moody’s) has confirmed the Government of Kenya’s B3 long-term foreign-currency and local-currency issuer ratings and senior unsecured debt ratings, concluding the review for downgrade that was initiated on 12 May 2023.
The outlook is now negative after placing Kenya for further downgrade since May 2023.
The confirmation of the rating at B3 reflects Moody’s assessment that intense liquidity pressures experienced in March and April 2023 have eased.
The improvement in domestic financing conditions has coincided with an increase in funding costs but preserves the government’s external funding options to meet its large external debt refinancing needs.
The government’s commitment to fiscal reforms under its IMF program has unlocked significant concessional financing from multilateral lenders.
The funding will help the government meet its external refinancing needs in the fiscal year ending 30 June 2024 (the fiscal year 2024), including the $2 billion Eurobond due in June 2024.
The negative outlook reflects the balance of risks remains to the downside.
These downside risks relate primarily to liquidity risk and elevated refinancing needs against limited external financing options and reliance on expensive domestic financing of the fiscal deficit.
The government will face substantial external amortizations even after the 2024 eurobond maturity, in addition to the ongoing material deficit.
Kenya cautions the public against Worldcoin
Why Uhuru did not speak during Azimio requiem service, Insider
Safaricom increases M-pesa rates as Finance Act 2023 takes effect
Ruto’s criticism of IMF & World Bank has borne fruits, CS Mutua
Kenya strikes deal to extend SGR to Uganda
As a result, the sovereign’s credit standing critically depends on its ability to finance its fiscal deficit through domestic funding sources to continue to deliver on reform progress and maintain access to IMF and multilateral funding.
Kenya’s local and foreign currency ceilings remain unchanged at Ba3 and B1, respectively.
The three-notch gap between the local currency ceiling and the sovereign rating is driven by relatively weak institutions and policy predictability and moderate political risk set against a relatively small footprint of the government in the economy and limited external imbalances.
The one-notch gap between the foreign currency ceiling and the local currency ceiling reflects relatively low external debt and a moderately open capital account, which reduce, although do not remove entirely, the incentives or need to impose transfer and convertibility restrictions in scenarios of intensifying financial stress.
Also read,
Ruto dismisses last remaining Uhuru appointees
Government partners with private companies after suffering massive cyber attacks
Niger army general declares himself president after the coup
Ruto’s lawyer reports Raila, Uhuru to ICC
Follow us
