Sharp Daily
No Result
View All Result
Sunday, June 1, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

S&P Global Ratings Revised Down Kenya’s Outlook To Negative On Account Of Weakening Liquidity Position

Dennis Otsieno by Dennis Otsieno
February 28, 2023
in News
Reading Time: 2 mins read
S&P Global

S&P Global [Photo/Courtesy]

On February 24, 2023, S&P Global Ratings, a Global Ratings Agency, revised its outlook on Kenya to negative from stable recorded in March 2021. However, S&P Global Ratings affirmed Kenya’s long- and short-term foreign and local currency sovereign credit ratings at ‘B’.

Credit rating is used by sovereign wealth funds, pension funds, and other investors to gauge the creditworthiness of a country. This in turn has a big impact on the country’s borrowing costs.

The agency has attributed this outlook mainly to Kenya’s adverse debt servicing capacity challenges given that Kenya has had constrained access to the international capital market.

The National Treasury halted plans to issue a Eurobond in 2022 on the back of high yields in the international market, which imply an elevated cost of borrowing.

RELATEDPOSTS

Artificial intelligence: Kenya’s next frontier for innovation

January 29, 2025

The case for governments enabling, not competing with, private enterprises

January 7, 2025

Read: Konza City To Host IASP Global Conference

This has seen Kenya rely on its foreign exchange reserves to service external debt. This refinancing risk puts pressure on the domestic market to carry the bulk of budget deficit financing.

Kenya’s Forex Reserves currently stand at USD 6.9 bn, equivalent to 3.8 months of import cover, below the statutory requirement of 4.0 and the East African Community Statutory requirement of 4.5 months.

S&P Global rating forecasts that Kenya will manage to service its debt in 2023, but faces key concerns and challenges in 2024, with the USD 2.0 bn Eurobond issued in 2014 set to mature in June.

Read: We Expect A Continued Depreciation Of The Shilling-Cytonn Report

Further, the agency highlighted the recent underperformance in the domestic bond market citing the February 2023 issuance in which the government achieved only 30% of its target, attributable to investors holding out for higher interest rates as they continue to attach a higher premium to compensate for the perceived risks on the economy.

On the bright side, S&P Global highlights the commitment to fiscal consolidation as one of the upsides, with the fiscal deficit as a % of GDP expected to average 5.7%, compared to the current 8.2%.

The agency also expects the concessional financing coming from multilateral and bilateral lenders such as the IMF and the World Bank to continue cushioning the Government as tax collection lags behind the targets.

Additionally, the Current account balance (difference between exports and imports) as a % of the Gross Domestic Product is expected to narrow to a deficit of 4.7% from the current 4.9% on the account of easing energy prices and recovering tourism receipts.

Notably, the agency’s report shows a growing concern that developing nations have high exposure to external debt and will struggle to refinance maturing issuances due to the high-interest rate demands being put forward by potential lenders.

This negative rating is likely to increase the cost of borrowing in the International Market as investors will price their risks higher and demand higher yields. Kenya can recover to normal by ensuring austerity measures to cut down on the budget deficit hence lowering the need for excessive borrowing and mitigating a possible debt crisis.

Email your news TIPS to editor@thesharpdaily.com

Previous Post

Tough Times For Kenya Power As It Records A KSh1.1Bn Half Year Loss

Next Post

Unlocking Effective Corporate Communication-A Practical Guide

Dennis Otsieno

Dennis Otsieno

Related Posts

News

Co-op Bank posts KES 6.9 billion profit in Q1’2025

May 16, 2025
Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025
News

The downside of Impact Investing

May 2, 2025
News

Leadership challenges at the University of Nairobi

April 24, 2025
News

Easter eggs and earnings: Growing your nest egg with CMMF

April 16, 2025
News

Geoffrey Ruku declares KES 377M net worth during CS vetting

April 15, 2025

LATEST STORIES

Best investments for Kenyan seniors: Secure, predictable & low-risk

May 30, 2025

Why June is the Secret Sweet Spot for Travel

May 30, 2025

Strategies to elevate more women to corporate leadership

May 30, 2025

Tap on Kenya’s 2025 tech revolution

May 30, 2025

How CURBS supports employers and employees

May 30, 2025

NSE deserves more attention from young investors

May 29, 2025

The silent strain of remote work on Kenya’s urban workforce

May 29, 2025

How Kenya’s crypto bill could reshape the digital economy

May 29, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024