This archive report was first published on 12 January 2020.
On January 12, 2020, Global Credit Ratings (GCR) issued a warning to Kenya Kazi (KK) Security, a leading security firm in Kenya, that its credit rating was at risk due to higher costs.
KK Security had acquired by multinational Gardaworld Security Corporation and had undergone a rebranding process, which led to increased costs.
As a result, the company's earnings before interest, tax, depreciation, and amortisation (Ebitda) margin dropped to 5% in 2019 from 7% in 2018.
GCR warned that if KK Security's Ebitda margins did not improve towards the 7% level, it could lower the ratings, putting pressure on the debt to Ebitda and interest coverage ratios.
The ratings agency also noted that rising refinancing risks, such as those expected in 2022, or a reduction in the weighted average maturity of the funding profile could also bring down the ratings.
However, GCR acknowledged that the current rating reflected KK Security's strong competitive position in the security business.
