S&P cuts Kenya

Standard & Poor's said it lowered the long-term local-currency rating on the Republic of Kenya to B+ from BB- and placed the long-term foreign- and local-currency B+ ratings on CreditWatch with negative implications.

The downgrades follow widespread violence and civil disturbances in the wake of the disputed results of the presidential election held on Dec. 27.

Mutual accusations of vote rigging by supporters of opposition candidate Raila Odinga and incumbent president Mwai Kibaki have paved the way for an intensification of violence and a rising death toll since the results, which favored Kibaki by a narrow margin and led to his inauguration, were announced on Dec. 30, the agency said.

The longer the situation remains unresolved, the more likely it is to affect Kenya's domestic debt market and balance of payments, according to S&P. If the political situation and its multiple social and economic ramifications do not improve over the course of the next month, the foreign- and local-currency ratings could be downgraded, the agency said.

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