GCR Publishes its Operating Environment Overview for Kenya.
Johannesburg, 18 May 2016 — Global Credit Ratings has published an overview of Kenya’s operating environment. The purpose of this publication is to highlight trends in Kenya’s macroeconomic and financial sector status quo, consider potential implications of recent events, and provide context to GCR’s ratings of issuers and instruments in that country.
For the past several years, Kenya has exhibited relative banking sector stability, together with steady local bond market development, resulting in growing businesses generally having relatively easy access to capital. However, slowing growth globally and in sub-Saharan Africa, diminishing availability of foreign direct and portfolio investment, currency weakness in emerging markets, rising global volatility and low commodity prices, as well as Kenya-specific events and issues, point to a more difficult operating environment for local financial institutions and corporate issuers in 2016.
In particular, three (lower and mid-tier) banks have been placed in receivership since July 2015, prompting a more interventionist stance from the Central Bank of Kenya (“CBK”). Separately, investors’ appetite for bond issues appears to have diminished, raising refinancing risk for corporates and banks. On the positive side, increased regional integration throughout the East African Community, as well as rising levels of funding from international Development Finance Institutions (supporting, in particular, financial inclusion initiatives for small business/consumers) are improving banking sector diversification.
As is to be expected, the Kenyan banking sector has been most significantly affected by recent events, with GCR’s overview entailing detailed coverage of the banking environment. Insight is also provided regarding debt rating trends, as well as a general assessment of the insurance sector.
For existing clients, the Kenya Operating Environment Overview is available for download via the GCR subscriber portal at http://www.globalratings.net/reports_section. Other interested parties are advised to contact GCR’s commercial division for information on how to secure a subscription for this operating environment overview.
Business Development Officer
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