Kenya’s sovereign credit rating has been upgraded by S&P Global Ratings to ‘B’ from ‘B-’, reflecting a reduction in near-term external liquidity risks following stronger export earnings, higher diaspora remittances, and a narrowing current account deficit. The outlook remains stable.
The move signals renewed investor confidence in Kenya’s ability to manage its foreign debt obligations and sustain growth, despite challenges from high interest costs and a protracted fiscal consolidation process.
According to S&P, Kenya’s improved foreign exchange (FX) position has been key to the rating upgrade. The country’s FX reserves rose to a record $11.2 billion in July 2025, buoyed by robust coffee exports, resilient diaspora inflows, and successful Eurobond issuance.
At the same time, external pressures eased as Kenya’s current account deficit narrowed to 1.3% of GDP in 2024, down from 2.6% a year earlier. A Eurobond buy-back and refinancing operation earlier this year also helped reduce near-term repayment risks, cutting annual Eurobond obligations to about $108 million between 2025–2027, compared to $300 million previously.
“Kenya’s near-term external liquidity risks have receded,” S&P said in its assessment, noting that manageable Eurobond amortization over the next three years reduces the likelihood of debt distress.
The Central Bank of Kenya (CBK) has played a crucial role in stabilizing financial markets. Since August 2024, it has cut the policy rate by a cumulative 350 basis points to 9.5%, lowering domestic borrowing costs. Treasury bill yields, which peaked at 16% in July 2024, dropped to around 8% by July 2025.
This easing cycle, supported by contained inflation at 4.1% in July 2025, has stimulated private-sector credit growth. Commercial banks, though slow to adjust lending rates, are beginning to extend more affordable credit, while small businesses and households benefit from improved liquidity.
Analysts expect Kenya’s economy to expand steadily, supported by agriculture, services, and infrastructure investments. S&P noted that strong domestic demand, coupled with easing inflation, will likely bolster Kenya’s medium-term growth prospects.
Despite the upgrade, S&P maintained a stable outlook, citing the balance between robust growth and ongoing fiscal challenges. Kenya still faces high interest costs and rising debt repayments, which continue to weigh on public finances.
A downside scenario could emerge if FX reserves fall sharply, refinancing pressures mount, or the government undertakes distressed debt exchanges. On the other hand, an upside scenario could see further upgrades if Kenya demonstrates “a steady commitment to sustainable public finances,” including lower fiscal deficits and interest costs.
Kenya’s sovereign credit ratings have seen multiple swings over the past two decades. In 2006, the country held a B+ stable rating, but subsequent years reflected volatility. During the global financial crisis in 2008, ratings were cut to B negative.
By 2010, Kenya returned to a B+ stable position, maintaining that level until 2020, when fiscal pressures linked to the COVID-19 pandemic led to a downgrade. The lowest point came in August 2024, when Kenya was rated B- stable, raising fears over its debt sustainability.
This latest Kenya credit rating upgrade marks a return to ‘B’ stable, signaling gradual recovery in investor confidence. Kenya’s public debt remains a source of concern. Government debt servicing accounts for a large share of expenditure, limiting fiscal space for development spending.
For international investors, Kenya credit rating upgrade may provide reassurance amid volatile global markets. The move aligns with broader optimism across African frontier economies, where commodity exports and remittances have cushioned external shocks.
Still, Kenya competes with peers like Nigeria, Ghana, and Ethiopia for investor flows, making fiscal credibility and political stability essential.
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