Kenya's sovereign credit rating placed at 'negative' by S&P

Cites stalled economic growth due to Covid-19

In Summary

•Says weak growth of less than a percentage, lowest in a decade,will significantly weigh on the country's already weak public finances.

•S&P's downgrade of Kenya's creditworthiness is coming a month after Moody's issued similar review, a move likely to slim the country's attractiveness in the global debt market.

Graph showing Kenya's debt.
Graph showing Kenya's debt.

Global rating firm Standard and Poor's (S&P) has downgraded Kenya's sovereign credit outlook to ‘negative’ from ‘stable’, citing stalled economic growth due to coronavirus pandemic.

The rating firm said the weak growth of less than a percentage, lowest in a decade, will significantly weigh on the country's already weak public finances.

"Although external financial support, including from the International Monetary Fund (IMF), will help fund Kenya's twin fiscal and external deficits in 2020, external debt will rise sharply in 2020 and remain high in 2020-2023," S&P said in a statement.


It affirmed Kenya’s ratings at ‘B+/B’ which suggests that while the government is able to meet its financial commitments it may be left highly exposed to adverse economic conditions.

IMF said Kenya's Gross Domestic Product (GDP) will shrink by 0.3 per cent in 2020, compared with an April projection of one per cent growth in the latest economic outlook.

This is the first annual contraction since 1993.

The lender added that the economy will expand four per cent next year, down from 6.1per cent projected in April.

S&P's downgrade of Kenya's creditworthiness comes a month after Moody's issued a similar review, a move that is likely to inhibit the country's attractiveness in the global debt market or force lenders to charge higher interests to cover for the default risk.

Moody’s Investors Service revised the outlook on Kenya’s rating to negative from stable, citing the country’s rising risks to meet its borrowing requirements and debt payments.

The agency affirmed the B2 rating due to the country’s diversified economy “with high growth potential and quite deep domestic financial markets".


In June, Fitch Rating revised the outlook on Kenya's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the IDR at 'B+'.

The agency said the coronavirus shock will drive a sharp economic slowdown and deterioration in the budget deficit and government debt/GDP ratio in 2020, against a background of a weak track record of fiscal consolidation.

It insisted that Kenya's public finances were already a rating weakness adding that the coronavirus shock will delay any significant narrowing of the fiscal deficit until at least the fiscal year ending June 2022 (FY22).

‘’As a result, we forecast general government debt to reach nearly 70 per cent of GDP in FY21, just above 2021 'B' median and well above the end-FY12 level of 39 per cent,’’ Fitch said.

In May, IMF also raised Kenya’s risk of debt distress to high from moderate in a statement because of the costly impact of the worsening COVID-19 crisis.


The country's total public debt is currently at Sh6.2 trillion, almost  70 per cent of its GDP.

IMF however said Kenya's rising government debt is somewhat mitigated by favourable debt composition and manageable debt maturity profile.

Foreign currency debt accounts for less than half of total sovereign debt, compared with the 'B' median of 60.5 per cent in 2020.