Fitch downgrades Kenya's credit outlook on higher borrowing

Monday July 20 2015

The Treasury building: Lowering the country’s

The Treasury building: Lowering the country’s rating from the current “B” range could make it difficult for the government to borrow more funds. PHOTO | FILE 

By VICTOR JUMA

Ratings agency Fitch has downgraded Kenya’s credit outlook from stable to negative, citing increased borrowing by the government amid higher spending and weak revenue collections.

This means that Fitch could lower its rating of Kenya’s sovereign debt over the next one to two years if the negative economic trends persist.

“Fitch Ratings has revised the outlook on Kenya's long-term foreign and local currency issuer default ratings (IDR) to negative from stable and affirmed them at 'B+' and 'BB-', respectively,” the advisory firm said in a statement.

“The agency has also affirmed the short-term IDR at 'B' and country ceiling at 'BB-'. The issue ratings on Kenya's senior unsecured foreign and local currency bonds have been affirmed at 'B+'.”

Lowering the country’s rating from the current “B” range could make it difficult for the government to borrow more funds or force it to pay higher interest on new debt issues.

Fitch’s “B” ratings indicate that material default risk is present, but a limited margin of safety remains.

It also signals that financial commitments are currently being met but capacity for continued payment is vulnerable to deterioration in the business and economic environment.