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Bond Market News
Kenya’s Dollar Bonds Hold Steady Despite Protests, Cabinet Shake-Up
July 12, 2024
Kenya’s President William Ruto, fired most of his cabinet on Thursday, after weeks of protests over proposed tax hikes and corruption in the government. While the tax hikes were abandoned, protests continued amid worries about corruption, joblessness and rising inflation. The protests that were ignited by the tax hikes, saw the parliament being invaded and partially set on fire. As per Washington post, in many other countries, such protests have ‘supported coups that overthrew long-standing Western allies, or fed revolutions that disintegrated into civil wars or failed amid brutal crackdowns’. The President has only continued to keep the prime cabinet secretary and foreign minister among his cabinet. Following the protests, Kenya has decided to reduce the fiscal deficit by relying on expenditure cuts instead of pursuing with tax hikes. This led to a one notch downgrade to Caa1 from B3 by Moody’s.
Kenya’s dollar bonds had been trending lower since March and have now stabilized, having even rallied by over 2% this month. Despite the cabinet shake-up, its dollar bonds have held steady, with its 6.3% 2034s at 76.5, yielding 10.2%.
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