Markets

African Union Faults Moody’s Over Kenya’s Credit Rating Revision

The African Union’s African Peer Review Mechanism (APRM) has criticized Moody’s Investor Service for its latest revision of Kenya’s credit outlook from ‘negative’ to ‘positive’, arguing that the move is an admission that the July 2024 downgrade was premature and incorrect.

In a statement released on Monday, APRM questioned Moody’s rating methodology, particularly the agency’s decision to skip a ‘stable’ outlook and jump directly from ‘negative’ to ‘positive’. The African Union body described this as an attempt to reverse a miscalculated rating action from July 2024.

Moody’s Reverses July Downgrade

On Friday, Moody’s revised Kenya’s outlook to ‘positive’ from ‘negative’, citing:

Easing liquidity risks
Improved debt affordability over time

However, Moody’s also affirmed Kenya’s local and foreign-currency long-term issuer ratings at ‘Caa1’, reflecting ongoing credit risks due to:

Weak debt affordability
High gross financing needs relative to available funding options

APRM Calls Moody’s July 2024 Downgrade “Speculative”

The APRM criticized Moody’s July 2024 downgrade, arguing that it was based on political protests against the proposed Finance Bill rather than economic fundamentals. The agency noted that at the time of the rating downgrade:

🔹 The final budget had not been released
🔹 The Finance Bill had not been passed
🔹 The new cabinet had not been formed

Similar Pattern in Nigeria’s Credit Ratings

APRM also pointed to Moody’s handling of Nigeria’s credit rating in 2023 as another example of premature assessments. The ratings agency downgraded Nigeria from ‘B3’ to ‘Caa1’, predicting a worsening fiscal and debt position under the new administration. However, by December 2023, Moody’s reversed its outlook from ‘stable’ to ‘positive’, citing improved economic policies.

The African Union’s review mechanism has urged credit rating agencies to adopt more transparent and data-driven assessments, particularly when analyzing African economies.

 

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Lawrence Baraza

Lawrence Baraza is a dynamic journalist currently overseeing content at Metropol TV Digital. With a keen focus on business news and analytics, Lawrence guides the platform in delivering insightful, data-driven content that empowers its audience to make informed decisions. Lawrence’s commitment to quality and his ability to anticipate market trends make him a key figure in the digital media landscape. His work continues to shape the way business news is consumed, making a significant impact in the field.

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