The Kenyan government issues two new series of 10-year optionless bonds. They are completely identical, except that one is denominated in Kenyan Shillings (KES) and the other in British Pounds (GBP). Which offering will most likely be given a higher rating by Moody’s? Kenyan Shillings British Pounds Both will be the same

It is more risky for a government to pay off a debt in a foreign currency than in their own. The Kenyan government could pay off its KES issue off by printing new money. A KES issue will be given a higher credit rating, though British investors may experience high currency risk.

Question Of The Week - Fixed Income (4) - CFA Level 1

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This topic has 1 reply, 1 voice, and was last updated May-187:30 pm by AdaptPrep.

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- AdaptPrep
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  09 May 2018 at 7:27 am
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  The Kenyan government issues two new series of 10-year optionless bonds. They are completely identical, except that one is denominated in Kenyan Shillings (KES) and the other in British Pounds (GBP). Which offering will most likely be given a higher rating by Moody’s?
  - Kenyan Shillings
  - British Pounds
  - Both will be the same
- AdaptPrep
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  - Undecided
  12 May 2018 at 7:30 pm
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  It is more risky for a government to pay off a debt in a
  foreign currency than in their own. The Kenyan government could pay off its KES
  issue off by printing new money. A KES
  issue will be given a higher credit rating, though British investors may
  experience high currency risk.
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