Kenya says negative credit ratings hurt chances of borrowing from sovereign debt market

A higher score from a ratings agency generally means cheaper borrowing for governments
A higher score from a ratings agency generally means cheaper borrowing for governments

Negative ratings by global credit agencies have hurt Kenya’s chances of attracting cheaper loans from international markets, the National Treasury said in a report on Wednesday.

The Treasury said in July that S&P Global Ratings cut Kenya’s rating outlook from stable to negative while Moody’s Investors Service assigned Kenya a B3 with a negative outlook. On the other hand, Fitch Ratings in February rated Kenya at B with a negative outlook.

The country’s credit ratings remained stable in 2021 and 2022 before the downgrade.

“The variations in the credit rating scores of the three agencies show the influence of subjectivity and the perceptions generated in the qualitative analysis,” the Treasury said.

Kenya has in the past two years been mulling a plan to borrow funds through Eurobond, but this has not been actualized due to the poor ratings that have made investors consider the country’s high risk.

The Treasury noted that for Kenya to graduate to investment grade (BBB-) and attract cheaper debt from global markets, there is a need to actualize fiscal consolidation, raise exports, and expand foreign reserves accumulation as well as stabilize inflation.

National Treasury and Economic Planning Cabinet Secretary Njuguna Ndung’u said in a recent interview with local media that Kenya is confident that it has put in place stronger interventions that have put the country on the path to sustainable economic recovery.

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