Moody's: B1 status a reflection of Kenya's strong growth potential
Pedestrians walk past the National Treasury building in Nairobi. Ratings agency Moody’s has affirmed Kenya’s sovereign debt rating at B1. PHOTO | FILE
Ratings agency Moody’s has affirmed Kenya’s sovereign debt rating at B1 which places it in a category of non-prime securities.
In an update to investors, which did not constitute a rating action, Moody’s noted the country’s strengths and weaknesses.
The agency said the B1 status is a reflection of Kenya’s “strong growth potential, leadership role in the East African region and relatively deep capital market.”
Moody’s said it views the government’s decision to sign two simultaneous IMF Stand-by agreements (SBAs) in February 2015 as strong evidence of its commitment to structural reforms.
These advantages are balanced against Kenya’s weak, although strengthening institutions, large twin (government and current account) deficits and moderate susceptibility to event risk, the agency said.
“Fiscal slippages that could lead to an unsustainable debt path and continued security incidents – or a renewal of political instability – that substantially dampen economic growth prospects would put downward pressure on Kenya's rating,” Moody’s added.
The agency observed that progress on economic diversification and a decline in terrorist incidents that would improve the environment for tourism would be credit positive.
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