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06 Dec 2018, Gergana Bencheva, EMIS Editor

Kenya, Tanzania’s banks exposed to sovereign risks – Moody’s

Global rating agency Moody's Investors placed Kenya and Tanzania among the top 10 countries in Africa whose commercial banks are exposed to sovereign risks, Africa Review reported. The estimate was made on the basis of their heavy investment in Treasury bills and bonds which has affected their creditworthiness.

The reason for the existing risks is the African governments’ need to rely on domestic borrowing to ease their revenue pressures over their significant budget deficits, the agency explained. For example, the Kenyan banks’ profitability is expected to narrow as interest rate caps are due to keep credit growth at low levels and squeeze credit to small and medium-sized enterprises (SMEs).

Except for Kenya and Tanzania, Moody’s has included in the sovereign risk countries such as Angola, Egypt, Ghana, Mauritius, Morocco, Nigeria, South Africa and Tunisia, Africa Review noted.

Sign in and read the full article in emis.com, and find out more about EMIS. Original source: Africa Review