The international rule of thumb to determine whether a country is at risk of default is settled in two ways; if their sovereign bonds are trading at more than 1,000 basis points above US Treasuries and/or debt-to-GDP ratio is above 60 per cent (applies only to developing countries according to the International Monetary Fund (IMF)), then there’s a high likelihood of default.
Presently, Kenya’s debt-to-GDP is above 60 per cent and five of Kenya’s six dollar-denominated Eurobonds are inching closer to the distressed territory.
