Moody’s Upgrades Kenya’s Credit Rating to B3 as Debt Risk Falls

• Jan 28, 2026

Moody’s has upgraded Kenya’s sovereign credit rating to B3 from Caa1, a move that reflects a reduction in the country’s near‑term risk of defaulting on its debts but does not mean Kenya’s financial challenges are fully resolved.

The credit rating agency also revised Kenya’s outlook to stable from positive, signaling confidence that recent improvements in economic and financial conditions can be sustained. Moody’s noted that Kenya’s foreign‑exchange reserves had strengthened, reaching around $12.2 billion by the end of 2025, which is equivalent to about 5.3 months of import coverage and provided a more reliable buffer against external shocks.

Part of the improved rating reflects greater access to international capital markets. In 2025, Kenya successfully returned to those markets, completing two Eurobond issuances totaling $3 billion, and used part of the proceeds to buy back maturing debt. These actions pushed major repayments further into the future and reduced pressure on immediate refinancing needs, a factor Moody’s said eased default risk.

Moody’s cited stronger external liquidity, improved market access, and better domestic financing conditions as key reasons for the upgrade. A narrower current account deficit, driven by higher remittances and stronger export performance, also contributed to a more stable financial position.

Despite the upgrade, Moody’s warned that Kenya’s long‑term credit profile remains constrained. The country still faces high debt levels—roughly 67 % of GDP—and weak debt affordability, with interest payments consuming more than 30 % of government revenue. Limited progress on fiscal consolidation and a persistent budget deficit could weigh on future ratings if not addressed

For ordinary Kenyans and investors, the upgrade sends a positive signal. It suggests the government is less likely to default on its obligations in the near future, which could improve investor confidence and potentially lower borrowing costs over time

However, the stable outlook also reflects caution: while near‑term risks have eased, Moody’s highlighted that long‑term improvements depend on the government’s ability to control spending, raise revenues sustainably, and reduce debt costs. The agency noted that stronger economic growth or effective fiscal reforms could support further upgrades, but if fiscal performance weakens or borrowing costs rise, the rating could face downward pressure again.

Overall, the B3 upgrade marks a vote of confidence in Kenya’s recent economic management while underlining the importance of continued fiscal discipline and debt management.