Kenya was downgraded to B from B+ by Fitch upon “persistent twin fiscal and external deficits, relatively high debt, and deteriorating external liquidity, and high external financing costs”. Fitch forecasts the current account deficit (CAD) to be at 5.9% of GDP in 2022 and at similar levels in the following two years. Kenya’s international reserves have fallen to $7.2bn as of November 2022 vs. $9.5bn at end-2021. Fitch expects Kenya’s external debt service ratio to rise to 24.8% of current external receipts in 2024 as compared to 16.6% in 2023 due to payments on its offshore bonds. While government debt is expected to gradually reduce, it is still forecasted to stay above 60% of GDP. Besides, inflationary pressures are expected to continue putting pressure on the economy.
Kenya’s dollar bonds were higher by 0.4 points across the curve with its 2024s-2027s at 90-93 cents on the dollar.