The Recent Downgrade of Kenya's Credit Rating by S&P: What Investors Need to Know
Are you worried about the recent downgrade of Kenya's credit rating by S&P? As the world's best investment manager and financial market journalist, I'm here to break down the implications for you.
S&P downgraded Kenya's rating to "B-" from "B" due to the repeal of the country's 2024/2025 Finance Bill, which will slow its fiscal consolidation. President William Ruto discarded the bill, which contained tax hikes worth 346 billion shillings, following protests that led to casualties.
This downgrade reflects a deteriorating medium-term fiscal and debt outlook for Kenya, as the government rescinded all tax measures proposed under the Finance Bill. The country has revised its budget, cutting spending and increasing local borrowing to cover the wider fiscal deficit.
Despite the downgrade, S&P maintained Kenya's outlook as stable, citing strong economic growth and continued access to concessional external financing. However, Moody's and Fitch have also downgraded Kenya's credit rating, further impacting its dollar bonds.
In conclusion, while Kenya faces challenges from high interest costs and structural imbalances, there are opportunities for growth and external financing. As an investor, it's important to stay informed and consider the implications of these credit rating changes on your portfolio.