Money Markets
Oil exploration in Turkana. Export of oil would be another credit positive for Kenya. Photo/FILE
By BDAfrica.com reporter
In Summary
- Fitch Ratings affirmed Kenya's long-term foreign and local currency default ratings at 'B+' and 'BB-'.
- The firm also affirmed Kenya's short-term foreign currency IDR at 'B' and Country Ceiling at 'BB-'.
- The issue ratings on Kenya's senior unsecured foreign currency bonds have been affirmed at 'B+'.
Weak governance remains a
constraint on Kenya’s sovereign credit ratings, global firm Fitch has
said, while affirming the country at ‘B+’ and stable.
Other limitations include much lower per
capita income than other nations of similar rating and weaknesses in
business environment and human development.
In a statement released Friday, Fitch Ratings noted governance has been “worsening in recent years based on World Bank indices”.
A lack of evidence, they noted,
is expected to lead to the International Criminal Court case against
President Uhuru Kenyatta being dropped while that against Deputy
President William Ruto struggles on amid “challenges bringing witnesses
to The Hague”.
Per capita income is “only
one-third of the 'B' median” while scores on measures of the business
environment and human development are lower than those for peer nations.
Fitch Ratings says Kenya's
long-term foreign and local currency Issuer Default Ratings (IDR)
remained unchanged at 'B+' and 'BB-', with stable outlooks.
Rwanda, meanwhile, was upgraded to 'B+' in a rating report released on the same day.
The firm also affirmed Kenya's short-term foreign currency IDR at 'B' and Country Ceiling at 'BB-'.
The issue ratings on Kenya's senior unsecured foreign currency bonds have been affirmed at 'B+'.
The credit rating shows the
safety for bond investors in an investment. A higher rating indicates a
higher probability the issuer of the bond will make the interest and
principal payments. For issuers, a higher credit rating means they will
pay a lower rate of interest to borrow money though the issuance of
bonds.
International credit ratings
relate to either foreign currency or local currency commitments and, in
both cases, assess the capacity to meet these commitments using a
globally applicable scale. The local currency international rating
measures the likelihood of repayment in the currency of the jurisdiction
in which the issuer is domiciled. It does not take account of the
possibility that it will not be possible to convert local currency into
foreign currency, or make transfers between sovereign jurisdictions
(transfer and convertibility [T&C] risk).
Foreign currency ratings additionally consider the
profile of the issuer or note after taking into account transfer and
convertibility risk. This risk is usually communicated for different
countries by the Country Ceiling, which "caps" the foreign currency
ratings of most, though not all, issuers within a given country.
No comments:
Post a Comment