Banking & Finance
Kenya Credit Rating Raised by S&P to ‘B’
The Central Bank of Kenya has slashed rates by 350 basis points to 9.50%, easing borrowing costs and spurring private-sector credit. Treasury bill yields dropped to 8% in July 2025, down from a 16% peak a year earlier. However, high interest costs still consume nearly one-third of government revenue.
S&P upgrades Kenya’s sovereign rating to ‘B’ with stable outlook, citing strong growth, reserves, and reduced liquidity risks.
Nairobi, Kenya – August 22, 2025 – S&P Global Ratings has upgraded Kenya’s long-term sovereign credit rating to ‘B’ from ‘B-’, assigning a stable outlook. The agency cited reduced external liquidity risks and resilient economic growth, even as the country continues to grapple with heavy fiscal pressures.
According to S&P, the stable outlook “reflects our expectation that Kenya’s robust economic growth and reduced immediate external liquidity risks will help offset pressures from high interest costs and a protracted fiscal consolidation process.”
Still, the agency warned that renewed pressure on foreign reserves or distressed debt operations could trigger a downgrade. Conversely, stronger fiscal discipline and falling borrowing costs could set the stage for further upgrades.
Record Reserves and Strong Exports
Kenya’s external position has strengthened, with foreign exchange reserves climbing to a record $11.2 billion in July 2025, nearly double the $6.6 billion held in 2023. The current account deficit narrowed to 1.3% of GDP in 2024, down from 2.6% in 2023.
This improvement is driven by higher export earnings, especially from coffee, and sustained diaspora remittances.
Debt Management and Eurobond Strategy
Debt liability management has also eased external financing risks. In February 2025, Kenya issued a $1.5 billion Eurobond and executed a partial buyback of its 2027 notes. This reduced near-term repayments to just $108 million annually through 2027.
External amortisations are expected to reach $2.7 billion in 2026 and $3.8 billion in 2027—levels S&P described as “manageable.”
(See also: Kenya’s Eurobond history)
Monetary Easing Supports Liquidity
The Central Bank of Kenya has cut interest rates by 350 basis points to 9.50%, the lowest since May 2023. This drove Treasury bill yields down to 8% in July 2025 from a peak of 16% a year earlier.
While lower borrowing costs have created more space for private-sector credit, Kenyan banks remain cautious amid elevated non-performing loans (NPLs).
(Related: Kenya’s business activity hits 11-month low on weaker demand, protests)
Persistent Fiscal Risks
Despite the upgrade, fiscal risks remain high. Kenya’s budget deficit is projected at 5.5% of GDP in 2026, while interest payments consume about one-third of government revenue—among the heaviest burdens in S&P’s global sovereign coverage.
The withdrawal of IMF concessional funding in early 2025 has also forced Nairobi to seek more expensive borrowing, including a $500 million loan from the UAE priced at 8.25%.
- Kenya Vision 2030 – to connect this rating with long-term development plans.
- Kenya–IMF relations – background on funding withdrawals and policy support.
- Kenya’s Eurobond history – for readers tracking Nairobi’s international debt strategy.
- Kenya’s fiscal policy – link to related coverage of budget deficits and reforms.