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Moody’s Downgrades KCB, Equity, Co-op Banks to Negative on Treasury Bond Exposure

Moody’s Investors Service on Thursday took rating actions on three tier-one Kenyan banks.

Moody’s Investors Service on Thursday took rating actions on three tier-one Kenyan banks. 

The global rating agency revised the outlook of KCB Bank Kenya Limited, Equity Bank and Co-operative Bank of Kenya Limited long-term deposit ratings to negative from stable. 

They stated that The negative outlook on the sovereign reflects the rising financing risks posed by Kenya’s large gross borrowing requirements at a time when the fiscal outlook is deteriorating.

“The negative outlook reflects primarily the banks’ sizeable holding of sovereign debt securities at between 1.3-2.0 times their shareholders’ equity, which links their creditworthiness to that of the government,” said Moody’s.

“All three banks’ local-currency deposit ratings of B2 are at the same rating level of the government, and a potential weakening in the government’s credit profile will lead to a weaker credit profile for the banks.”

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