Moody’s revises Kenya’s rating to ‘positive’ due to potential reduction in liquidity risk Reuters
(Reuters) – Global credit rating agency Moody’s (NYSE: ) revised Kenya’s outlook to “positive” from “negative” on Friday, citing a potential reduction in liquidity risk and improvement in debt affordability over time.
The East African country has been struggling with heavy debt and has been seeking new lines of funding since last year amid protests across the country against proposed tax hikes.
Domestic financing costs have started to fall amid a cycle of monetary easing, and this could continue if the Kenyan government manages its fiscal consolidation effectively, opening the door to external financing opportunities, the report said.
“Given low inflation and a stable exchange rate, there is potential for further reductions in domestic borrowing costs as past monetary policy rate cuts translate into lower long-term borrowing costs,” Moody’s said.
The agency added that the new International Monetary Fund program will improve Kenya’s external financing, while other multilateral lenders such as the World Bank will continue to be significant sources of financing, even without IMF financing.
The agency affirmed Kenya’s long-term local and foreign currency issuer ratings at “Caa1”, citing still elevated credit risks fueled by very poor debt affordability and large gross funding needs relative to funding opportunities.
