Kenyan sovereign bonds have dropped significantly since Moody’s downgrade on the country’s credit rating on May 7.
According to data from the Central Bank of Kenya (CBK) increase in yields showed falling in price value ranging from 0.5 percent to 1.315 percent within five working days, May 7-14.
The increase in yields implies that should Kenya decide to go to global markets for commercial borrowing, the country will likely pay higher interest loans, something that happened in the past through sovereign bonds and syndicated loans.
“In the international market, yields on Kenya’s Eurobonds increased by an average of 82.5 basis points,” said CBK.
According to Cytonn Investments, investors were expected to continue asking for premium on the Eurobond due to the slower growth as well as the Moody’s downgrade.
“We anticipate investors to continue attaching a higher risk premium on the country due to the anticipation of slower economic growth attributed to the coronavirus pandemic and the recent downgrade by Moody’s.”
Moody Investors Service, on May 7, said it had changed Kenya’s credit rating to reflect the country’s financial risks in large borrowing requirements.