Fitch has revised the Outlook for Kenya’s long-term Foreign Currency Issuer Default rating (IDR) to Negative from Stable and affirmed the IDR at “B”.
According to Fitch, the revision of Kenya’s Outlook to Negative reflects increased external financing constraints amid high funding requirements, including a USD2 billion Eurobond maturity in 2024, weakening international reserves, rising financing costs, and uncertainty regarding the fiscal trajectory, for example, due to execution risks of the announced tax hikes amid social unrest.
This downgrade comes on the heels of Fitch’s downgrade of Kenya’s IDR in December 2022, when the IDR was downgraded to “B” from “B+” However, they maintained the outlook for long-term foreign issuance as stable.
Other Credit rating agencies have also downgraded Kenya’s outlook, with S&P Global downgrading it to negative from stable on February 20, 2023, while Moody’s Credit Rating Agency downgraded Kenya’s long-term foreign currency rating to B3 from B2 with a negative outlook on the back of increased liquidity risk on May 20, 2023.
Read more: Kenya’s Credit Outlook Downgraded Amid Tight Liquidity Position
With the decreased rating, Kenya will have to rely more on domestic debt funding as the negative ratings indicate a heightened default risk which will see foreign investors demanding more interest from the loans to the government.
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