Mbadi: Kenya’s Debt Discipline to Unlock Better Credit Ratings and Cheaper Loans

National Treasury Cabinet Secretary John Mbadi has reaffirmed Kenya’s commitment to strengthening debt management and fiscal discipline, saying such efforts will help improve the country’s credit ratings and attract more investment.

Speaking during the Credit Rating Workshop in Mombasa on Monday, October 6, 2025, Mbadi emphasized that credit ratings play a crucial role in determining how Kenya borrows and how investors perceive its economy. He explained that a good credit rating not only allows the country to access cheaper loans but also builds investor trust and confidence.

“Credit ratings are not mere statistical classifications but powerful instruments that define a nation’s financial reputation, influence its cost of borrowing, and shape investor confidence,” the National Treasury and Economic Planning stated.

Mbadi noted that a better sovereign rating enhances Kenya’s reputation in the global capital markets, reduces the debt servicing cost, and provides more room for mobilizing funds to national development priorities.

He also underscored open and transparent engagement with credit rating agencies, and noted that clear communication, data quality, and institutional consistency are important in pushing Kenya’s ratings higher.

“Meaningful engagement with credit rating agencies requires transparency, consistency, and institutional coherence,” he said.

To strengthen this process, Mbadi announced that the government will establish a Credit Rating Committee to manage Kenya’s interactions with global rating agencies. The committee will ensure that the country’s ratings accurately reflect its true economic performance and align with its fiscal and developmental objectives.

The Treasury boss explained that the initiative will also help the government build its own technical capacity, reducing reliance on foreign consultants when handling credit rating processes.

Kenya’s current ratings stand at B (S&P), B- (Fitch), and Caa1 (Negative) (Moody’s) – levels that have made external borrowing expensive due to perceived risks. Nevertheless, Mbadi commended recent upgrades in the outlook of Kenya, stating that they were a reflection of reforms implemented under the Finance Act 2025, which enhanced tax compliance and fiscal credibility.

He cited the early settlement of the 2028 Eurobond as a key milestone in restoring market confidence. The Treasury has only borrowed Ksh193.8 billion (USD 1.5 billion) to settle part of the bond ahead of time. The government opted for phased repayments to ease future debt pressure and stabilize the Kenyan shilling.

“That is easier as opposed to waiting for a one-billion-dollar bond and paying it once. It puts a strain on the economy,” Mbadi said in a televised interview on Saturday, October 4, 2025.

The Eurobond issue, which was structured in seven and twelve-year tranches, carried an effective interest rate of 8.7 percent – a percentage point lower than what Kenya would have paid earlier in the year. Mbadi said the move is evidence of the government’s commitment to responsible management of debt, reducing default risks, and preserving financial stability.

He concluded that the improvement of Kenya’s credit ratings will not only lower the country’s cost of borrowing but also free up resources for priority areas like health, education, and infrastructure, in favor of long-term growth and fiscal resilience.

The post Mbadi: Kenya’s Debt Discipline to Unlock Better Credit Ratings and Cheaper Loans appeared first on Nairobi Wire.