Kenya has received a boost in investor confidence after global credit rating agency S&P Global Ratings upgraded the country’s long-term sovereign credit rating to ‘B’ from ‘B-’, with a stable outlook, while affirming the short-term rating at ‘B’.
The upgrade reflects growing optimism about Kenya’s fiscal outlook and marks a positive shift in how international markets may view the country’s credit risk.
S&P also raised Kenya’s transfer and convertibility assessment to ‘B+’ from ‘B’, citing improved confidence in the country’s ability to facilitate currency exchange and cross-border capital flows.
“The stable outlook reflects our expectation that Kenya’s robust economic growth and reduced immediate external liquidity risks will help offset pressures stemming from high interest costs and a protracted fiscal consolidation process,” said S&P Global Ratings.
Drivers Behind the Upgrade
S&P attributed the rating improvement to easing external liquidity risks, resilient economic activity, and stronger balance of payments support.
“The upgrade reflects our view that Kenya’s near-term external liquidity risks have receded. External data revisions, coupled with strong performances in coffee exports and diaspora remittances, supported a narrowing of Kenya’s current account deficit to 1.3 per cent of GDP in 2024, from 2.6 per cent in 2023,” the agency stated.
- Foreign Exchange Reserves rose to a record-high USD 11.2 billion (KSh 1.5 trillion) in July 2025, up from USD 6.6 billion (KSh 852.9 billion) at the end of 2023.
- Eurobond Management: Kenya’s USD 1.5 billion (KSh 193.8 billion) Eurobond issuance and buy-back in February 2025 reduced annual repayments to USD 108 million (KSh 13.9 billion) from USD 300 million (KSh 38.8 billion).
- S&P projects total external debt amortisations to remain manageable at USD 2.7 billion (KSh348.9 billion) in FY2026 and USD 3.8 billion (KSh491 billion) in FY2027.
Domestic Conditions and Monetary Easing
Kenya’s domestic financial environment has also improved, supported by a sustained monetary easing cycle:
- The Central Bank of Kenya (CBK) has delivered seven consecutive rate cuts since August 2024, lowering the policy rate by 350 basis points to 9.5% as of August 2025.
- 91-day Treasury bill yields declined to ~8% in July 2025, down from a peak of 16% in July 2024, easing domestic financing costs.
- Inflation remained contained at 4.1% in July 2025, with stable exchange rate dynamics.
“Ongoing monetary easing has bolstered domestic funding conditions,” S&P noted.
Risks and Outlook
While the upgrade signals growing confidence in Kenya’s ability to meet its debt obligations, S&P cautioned that downside risks remain:
“We could lower the ratings if external refinancing pressures intensify—particularly in the event of a sustained decline in foreign exchange reserves, or if future debt operations are viewed as distressed exchanges.”
Conversely, S&P indicated that further upgrades are possible:
“We may raise the ratings if Kenya demonstrates a strong and consistent commitment to fiscal sustainability.”
Summary Table: Kenya’s Sovereign Credit Ratings
| Rating Agency | Previous Rating | Current Rating | Outlook | Meaning | Date Released |
|---|---|---|---|---|---|
| Moody’s | Caa1 | Caa1 | Positive | Substantial credit risks | 24 Jan 2025 |
| Fitch | B | B- | Stable | Highly speculative | 25 Jul 2025 |
| S&P Global | B- | B | Stable | High risk; obligations met for now | 22 Aug 2025 |
Source: Fitch Ratings, S&P Global, Moody’s
Kenya’s improved liquidity position and proactive debt management have bought valuable time. However, sustaining investor confidence will require deeper fiscal reforms, enhanced revenue mobilisation, and reduced reliance on costly measures, as the country approaches the 2027 elections.
