S&P Global Ratings, an international ratings agency, has raised Kenya’s long-term sovereign credit rating to ‘B’ from ‘B-’, with a stable outlook, citing reduced near-term external liquidity risks.
The rating agency noted that this upgrade is a result of robust performance in coffee exports and diaspora remittances, which have bolstered Kenya’s financial position. The country’s foreign exchange (FX) reserves soared to a record-high $11.2 billion in July 2025, a significant increase from $6.6 billion at the end of 2023.
S&P also projects the country’s total external debt payments will remain manageable at $2.7 billion in fiscal year 2026 and $3,8 billion in fiscal year 2027. This follows the government’s successful move in February 2025 to issue a $1.5 billion Eurobond and concurrently buy back a portion of its 2027 notes, which lowered the country’s annual Eurobond principal repayments to just $108 million through 2027, down from $300 million.
This upgrade will likely have a positive impact on Kenya’s economy. A better credit rating often translates to lower borrowing costs on international markets, making it cheaper for the government to raise funds and service its debt. It also serves to enhance investor confidence, potentially attracting more foreign investment and improving the country’s access to global capital markets.
However, the ratings agency also cautioned that significant fiscal vulnerabilities remain. Kenya’s budget deficit is projected to stay substantial, and a large portion of government revenue is still being used to service interest payments. The stable outlook balances the reduced external risks with these ongoing fiscal challenges.
A further upgrade to Kenya’s rating would depend on the government’s ability to demonstrate continued fiscal discipline and a sustained reduction in borrowing costs, while a downgrade could be triggered by renewed pressure on foreign reserves or signs of a distressed debt situation.
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