This archive report was first published on 20 May 2020.
On May 7, 2020, Moody's Investors Service downgraded Kenya's credit rating to negative from stable, sparking a significant drop in prices of Kenyan sovereign bonds.
According to data from the Central Bank of Kenya (CBK), yields on these bonds increased by amounts ranging from 0.5 percentage points to 1.315 percentage points within five working days between May 7-14.
The rise in yields signals that Kenya would pay higher interest rates should it decide to borrow commercially from global markets.
On average, the decline in yields stood at 0.825 percentage points, equivalent to 82.5 basis points, during the week since the downgrade.
"In the international market, yields on Kenya's Eurobonds increased by an average of 82.5 basis points," the CBK said.
Cytonn Investments expects investors to continue asking for a premium on the Eurobond due to the projected slower growth and 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 attributable to the coronavirus pandemic and the recent downgrade by Moody's," Cytonn Investments said.
