S&P Global Ratings has upgraded Kenya’s long-term sovereign credit rating to ‘B’ from ‘B-’, citing reduced near-term external liquidity risks, stronger foreign exchange reserves, and resilient economic growth. The outlook has been maintained at stable.
- •The rating agency highlighted that robust export earnings-particularly from coffee-and sustained diaspora remittances helped narrow Kenya’s current account deficit to 1.3% of GDP in 2024, from 2.6% in 2023.
- •These inflows, alongside recent debt operations, boosted Kenya’s foreign reserves to a record $11.2 billion in July 2025, nearly double the $6.6 billion held at the end of 2023.
Kenya’s February Eurobond deal; an $1.5 billion issuance paired with a buyback of part of the 2027 notes, cut near-term Eurobond repayments to $108 million annually through 2027, easing rollover risk. External amortizations are now projected at $2.7 billion in FY2026 and $3.8 billion in FY2027, levels S&P described as “manageable.”
On the domestic front, the Central Bank of Kenya has cut rates by 350 basis points since August 2024, driving T-bill yields down to 8% in July from a 16% peak a year earlier. That has reduced borrowing costs and reopened space for private sector credit, though banks remain cautious amid a high stock of non-performing loans.
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The upgrade comes against persistent fiscal strains. The budget deficit is expected at 5.5% of GDP in FY2026, with interest costs consuming roughly a third of revenue—among the heaviest burdens of any sovereign in S&P’s coverage. The withdrawal of IMF concessional funding earlier this year has also pushed the government toward more expensive financing, including a $500 million UAE loan priced at 8.25%.
S&P said Kenya’s stable outlook balances reduced external risks with ongoing fiscal vulnerabilities. An upgrade would require clear evidence of fiscal discipline and lower borrowing costs, while any renewed pressure on reserves or distressed debt operations could trigger a downgrade.
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