africa Banking credit rating Economy Finance Kenya Tanzania

Moodys assigns Tanzania higher credit rating than Kenya

Global rating agency Moody’s has ranked Tanzania higher than Kenya in credit worthiness.

The US firm has assigned Tanzania a first-time debt issuer rating of B1, a notch higher than Kenya’s B2 after downgrading the latter’s on February 13 because of mounting concerns over a faster pace of new debt accumulation amid sluggish revenue.

Unlike Kenya’s stable outlook thanks to her diversified economy, Moody’s has assigned Tanzania a negative outlook due to unpredictable policy environment, which may hit investments.

That means considerable chances of Tanzania being downgraded to Kenya’s rating band for sovereign credit.

“Uncertainty over the regulatory environment and policy stance of the government, particularly as it relates to the mining sector, could have a long-term negative impact on the country’s growth potential and ability to attract foreign investment,” Moody’s said in a statement on Tanzania’s rating on Monday.

“Even though mining represents only a small share of GDP, the sector is an important source of government revenue and export earnings.”

Kenya’s 7.25 per cent interest on 10-year tranche of $1 billion (Sh101.32 billion) was, for example, higher than Nigeria’s 7.1 per cent on a 12-year $1.25 billion (Sh126.65 billion) bond on February 15 and  6.59 per cent return that Egypt offered on 10-year tranche of its successful $4 billion auction on February 13.

The country is battling fast-maturing debt, with about Sh1 trillion projected in repayments in the next financial year from July.

That is a steep rise from Sh658.23 billion budgeted in the current year that ends in June, and the Sh435.7 billion paid in the year ended June 2017.

Source: Business Daily

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