• Moody's provides investors with credit ratings, risk analysis and research for stocks, bonds, and government entities.
• In its August 2 review, Moody's said it will treat Kenya’s planned buyback of a portion of its Eurobond debt as a default.
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AU's African Peer Review Mechanism (APRM) has condemned as 'premature' Moody's Investors Service comments on Kenya's planned buyback of its Eurobond.
Moody's provides investors with credit ratings, risk analysis and research for stocks, bonds and government entities.
In its August 2 review, Moody's said it will treat Kenya’s planned buyback of a portion of its Eurobond debt as a default.
It followed an announcement in June by President William Ruto that Kenya plans to buy back half of its $2 billion (Sh281bn) of 2024 Eurobonds before the end of the year.
Treasury said in July it will wait for a lead manager to guide it through the proposed buyback of the Eurobond at 11 per cent or below to refinance the maturing sovereign debt.
Kenya's Eurobonds plunged following Moody's review that redeeming the Eurobond coupons at a price below par would be a “distressed exchange which will result in economic losses to creditors”.
But APRM said the comments were made prematurely even before the official details and the terms of the buyback are made public.
It said the preemptive rating action is nothing short of a ‘premature release of a credit rating to the public’.
"The APRM views the comment as highly speculative, damaging and ignores the ‘voluntary’ nature of the proposed bond buyback program, which allows investors the right not to participate," APRM said in a statement on Friday.
APRM condemned Moody's review of the intended buyback terming it pessimistic and negative commentary that 'has triggered a selloff in Kenya's Eurobonds, spike yield and an associated decline in the domestic currency'.
It said the move undermines the government’s fiscal efforts, diminishing investors’ appetite and confidence, thereby compromising the success of the buyback programme.
"In view of these continuing impromptu pessimistic and negative commentaries...the APRM calls on African Network of National Regulators of Rating Agencies to institute appropriate regulatory measures that ensure proper conduct of credit rating business," APRM said.
APRM is an autonomous entity of the African Union, which among other functions, mandates it to support African countries on credit ratings.
It undertakes routine analyses of rating actions and commentaries assigned by international credit ratings agencies in African countries.
It does this with the aim of fostering good governance, political stability, and economic growth across the African continent by empowering participating countries to address governance challenges and promote sustainable development through voluntary assessments, peer learning, and mutual accountability.