Global rating firm Moody’s could further lower Kenyan creditworthiness currently at B2 stable.
On Monday, the firm announced completion of a periodic review on Kenya, and raised concern over the country’s very low fiscal strength, ballooning debt and runaway corruption due to weak rule of law.
“The country’s current credit profile is supported by its “moderate economic strength, which reflects the relative diversification of the economy and high growth rates, despite low wealth levels, weak policy effectiveness, weak rule of law and elevated corruption,’’ Moody’s said.
It added that the government’s debt burden and poor revenue collection performance; and susceptibility to event risk predominantly stemming from government liquidity risk piles pressure on the country’s ratings.
Early this year, Moody’s downgraded Kenya’s sovereign creditworthiness from a notch lower due to rising liquidity risk, increased external vulnerability and higher reliance on commercial external debt.
Last year, the firm downgraded Kenya’s credit rating to B2 from B1 owing to rising debt levels and deterioration in debt affordability.
The move came days after Fitch credit rating agency revised Kenya’s credit outlook to a positive at B+ score from a negative.
In Late April, the New York-based credit rating maintained Kenya’s credit score for long-term foreign-currency Issuer Default Rating (IDR) at B+ with a stable outlook high debt, implying that the country’s ability to meet her debt obligations remains satisfactory.
Fitch and Standard & Poor’s (S&P’s) are usually invited by the Kenyan government to assess risks in the economy such as gaps in the budget and value of cash outflows and inflows.
Kenya’s public debt surged closer to Sh6 trillion at the end of June after Treasury borrowed an additional Sh770 billion in 12 months.
The stock of foreign loans increased by Sh462 billion to reach Sh3 trillion while domestic debt went up by Sh307 billion, this according to Central Bank of Kenya.
The agency however declined to give a defined rating on the country despite issuing a comment on Kenya’s credit profile.
‘’This document summarizes Moody’s view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period,’’ it said.
Moody’s conducts these periodic reviews through portfolio reviews in which it reassesses the appropriateness of each outstanding rating in the context of the relevant principal methodologies, recent developments, and a comparison of the financial and operating profile to similarly rated peers.