APRM dismisses ratings on Kenya as ‘sham’
Rating action was a reversal of Moody's premature rating action

African Peer Review Mechanism (APRM) has poured water on Moody’s credit rating on Kenya that changed from ‘negative’ to ‘positive’ and reaffirmed Caa1 rating, citing a potential ease in liquidity risks and improving debt affordability over time.
Reacting to the changes, APRM said it is rare for a credit rating agency to move a country from ‘negative’ to ‘positive’ rating, skipping a ‘stable’ outlook. “The change is an admission, in remedy, that a negative outlook was an incorrect rating,” APRM has disclosed.
It further revealed that the rating action was a reversal of Moody’s premature rating action disclosed on July 8, 2024, which was largely driven by protests in Kenya over the proposed Finance Bill.
APRM usually undertakes routine analyses of rating actions and commentaries assigned by the international credit ratings agencies on African countries.
APRM reveals that the rating Moody assigned to Kenya in July 2024, which was purported to have downgraded the country, was based on speculation.
“The midterm review data on the appropriation bill, the spending allocations, the final budget, and the Finance Bill had not yet been released when the rating agency made its announcement,” the statement said.
This is not the first time Moody’s has acted prematurely and erred in its analysis. However, while APRM most experts in Kenya, too, argue that the credit ratings, which Moody is said to have assigned, are different from what is on the ground.
Bob Kimani, Financial Analyst, argues that most of the factors that Moody based its conclusion on to change Kenya’s credit ratings from negative to positive apart from inflation have not changed.
Charles Oseko – an investment analyst also questions the data, which Moody used to arrive at its conclusion. In January 2023, APRM claims that Moody’s also erred by downgrading Nigeria from ‘B3’ to ‘Caa1’ citing that the government’s fiscal and debt position was expected to deteriorate further under the new administration.
The Federal Government of Nigeria challenged the misnomer saying the rating action the rating agency lacked an understanding of the country’s domestic environment. Moody’s later reversed Nigeria’s outlook from ‘stable’ to ‘positive’ in December 2023, citing positive economic policy developments in the country.
However, relatively similar factors were present when Moody’s downgraded Nigeria and the rating reversal in the short-term was evidence that the rating agency had acted prematurely and erred.
“The APRM views such rating actions as irresponsible and detrimental, leading to unnecessary costs to governments, triggering Eurobond sell-offs, and sustaining a negative sentiment on African instruments,” the statement said.
The Africa peer review encouraged the rating agency to be diligent and wait for the complete term review data before taking rating actions rather than taking speculative and premature rating actions based on missing or incomplete information.