Latest news with #Moodys
Zawya
2 days ago
- Business
- Zawya
Kenya faces surge in interest rates as global tariff wars threaten investment
Kenya is facing fresh fears of high interest rates and a risk of slowing down investments and private sector businesses, even as the country's central bank sustained cuts to boost consumer spending. The latest fears are as a result of global trade policy uncertainties sparked by escalating US-led tariffs wars, which are weighing heavily on world financial and credit markets. Economists and global rating agencies say tightening credit conditions in the world financial markets will affect foreign inflows and the flow of credit to emerging and frontier markets such as Kenya. And this will leave the National Treasury with limited options including turning to local banks and pension funds for money through treasury bill and bonds and a rise in interest rates.'Significant and wide-ranging increase in US tariffs would affect sovereign credit conditions by disrupting trade flows, directly and indirectly hurting GDP growth, weakening fiscal and external balances and tightening financing condition,' says Moody's Investor Service in a brief this week.'No wide-ranging tightening of financing conditions yet, but liquidity risks remain high for frontier markets with limited buffers.' 'For sure, the environment is challenging and has been amplified by global uncertainties and the confidence shock that has percolated to markets so far from the last quarter,' says Churchill Ogutu, an economist at IC Asset managers.'Generally, these conditions have disincentivised tapping the dollar international markets. Furthermore, the dollar weakness is also giving positive offset to any potential issuer. Given the uncertainty of financing flow, timings of external issuance, the government will have to rely on domestic borrowing as was the case in the just ended fiscal year.'Economists at the London Stock Exchange (LSE) listed Standard Chartered Group Plc say high US rates and a stronger US dollar will make it harder for emerging market issuers to borrow in international capital markets.'Expectations of a shallower rate cutting cycle from the Fed is likely to translate into a stronger USD and a steeper US yield curve,' they say.'Higher US rates and a stronger USD will make it harder for emerging market issuers to borrow in international capital markets, and could significantly reduce portfolio flows to emerging markets. In addition, emerging market central banks may be constrained from cutting rates meaningfully.'Trump has pledged to use import tariffs to reduce US trade deficit and bring production back to the US. While this process has begun, uncertainty around the scope and extent of tariff action from the US and likely retaliation by trade partners might act as drags on consumer and investor confidence, slowing growth. The expectations of spending on defence and infrastructure together with possible tax cuts are likely to be inflationary and could see the Fed terminal rate settling at a higher level than in the pre-pandemic period.'This would significantly change the global funding environment for emerging markets. The external funding environment for emerging markets will likely be tougher as US Money Market rates could stay elevated with a higher Fed terminal rate,' the economists at Standard Chartered Group Plc say.'Emerging market economies that are more domestically driven and have better fiscal and monetary buffers to offset external shocks are likely to be more resilient to external shocks.'Economists at the African Export-Import bank (Afreximbank), say the political turn towards tariffs and subsidies in 2025 has spilled over into finance and heightened trade protectionism shaping the global economic landscape and sparking widespread risk aversion in global financial markets.'As investors reassess the United States' economy's outlook and the role of the US dollar as a stable medium of exchange and a stable store of value, a weaker US dollar and higher interest rates could tighten global liquidity, raising funding costs for countries – many of them in Africa – with large development finance gaps, twin deficits, and scant reserves,' says Afreximbank.'Risk-averse banks could pull back trade credit precisely when exporters need it most, amid negative financial sentiment, and precipitate a global recession, while foreign direct investors could demand higher returns before committing capital in African markets, perceived as riskier.' Kenya will be looking to borrow Ksh287.7 billion ($2.23 billion) from foreign lenders this financial year (2025/2026) to support its Ksh4.29 trillion ($33.25 billion) spending plan which has a hole of Ksh923.2 billion ($7.15 billion). National treasury has set out to borrow Ksh635. 5 billion ($4.92 billion) from the domestic market in the current financial year but this could go up going by the unfolding conditions in the global credit markets.'We borrow externally because it is cheaper. But the cost goes beyond interest rates, there are other conditions as IMF has shown. We should seek cheaper funds with few conditionality. That is why the government loves borrowing locally, it's straight forward, the only cost is interest rates,' says Prof XN Iraki of the University of Nairobi's Faculty of Business and Management Sciences.'To mitigate crowding out effect, we should try other bonds, beyond Eurobonds and be good negotiators. We should look at each type of the bond and do a cost benefit analysis to pick the best bond. With the conditionality, and tightening global financial conditions (including Europe borrowing to boost defense), we should learn to live within our means and reduce corruption and waste.'Overall CBK has lowered benchmark lending rate by 3.25 percentage points to 9.75 percent in June 2025 from 3 percent in August 2024 and with the with the easing of monetary policy stance, interest rates in Kenya have been declining. For instance, the rates on the 91-day Treasury bills declined from an average of 15.9 percent in May 2024 to 8.3 percent by May 2025 while the average commercial bank lending rates that peaked at 17.2 percent in November 2024 declined to 15.7 percent in April 2025. The bulk of these funds amounting to Ksh851.42 billion ($6.6 billion) will go towards servicing domestic while Ksh246.26 billion ($1.9 billion) will be paid to foreign lenders. 'Kenya's financial position is at an inflexion point. Hence, Trump's policies are likely to make the situation worse,' says Prof Samuel Nyandemo of the University of Nairobi's School of Economics.'Consequently more borrowing, particularly from the domestic market whose aftermath shall be crowding out private investors and reduced government expenditure. Ultimately, this shall shrink the economy, hence reducing economic growth.'
Yahoo
2 days ago
- Business
- Yahoo
I'm a two-time tech founder. But restaurants are where I learned to lead
Sudden equipment failures. Supply chain surprises. Retaining staff as the goalposts move in real time. These aren't challenges I've faced as a tech founder—but I have faced them running restaurants. This new tax deduction in Trump's 'big, beautiful bill' lets people cash in on charitable donations up to $2,000. Here's what to know Housing market 'red flare': Moody's chief economist sees home price declines spreading Your dog could save us from America's most annoying invasive species Twenty years ago, I cofounded a conveyor belt sushi concept that grew over 10 years across 12 units and six states. And if I've learned one thing from over two decades of operating restaurants, it's that they require more discipline than any startup, with far less margin for error. On paper, hospitality and tech don't seem to overlap. Yet, many of my current practices as a leader were forged in a restaurant's back of house, where staying close to the numbers and the customer experience was key to survival. A master class in leading under pressure I didn't expect my time running a sushi chain to influence how I run my software company. But the leadership fundamentals that were critical in the restaurant business turned out to be the same ones needed in tech. 'Putting out fires' in tech usually means resolving a bug. At a restaurant, there could be a literal fire. Once, during a lunch rush at one of my restaurant chain's Washington, D.C., locations, our hood system failed. As teriyaki chicken smoke filled the HVAC system and forced a 14-story building to evacuate, we scrambled to fix it without stopping the line. Even when the crisis isn't so dramatic, leaders have to rally the team quickly. Staff and customers depend on you in person, so you think on your feet to handle any challenge at hand. As you juggle priorities on the floor, you're also protecting razor-thin margins behind the scenes. Unlike in tech, there's no bridge round to float you through a rough quarter. It's your job to monitor costs and adjust staffing or procurement to keep things stable. Anyone who's worked in a restaurant knows that it's a unique type of chaos. But the instincts the environment encourages can also drive resilient tech companies. 3 restaurant rules that tech leaders should borrow Restaurants don't have the luxury of recurring subscription payments—they have to fight every day for every dollar of revenue. That reality pushed me to be data-driven and relentlessly hands-on. While some lessons didn't feel obvious at the time, they guide how I lead in tech today. For example: 1. Be customer obsessedWell-run restaurants are maniacal about customer service. If you need proof, look to restaurateur Will Guidara's concept of 'unreasonable hospitality:' creating extraordinary experiences by exceeding customers' expectations. In this mindset, every touchpoint during a meal matters, from the first greeting to how the check arrives. Staff are expected to embody that service culture, no matter their role. Tech companies love to say they're customer-centric, but how often does that ethos extend across the org? If customer experience is siloed to success or support teams, you limit your ability to build with empathy. Tech leaders should take a page from restaurants and make it everyone's job to surprise and delight customers. It can be as simple as a program that lets team members nominate partners and clients to receive curated gifts—whether they're celebrating a win or going through a difficult time. Real customer obsession shows up when service is a shared culture, not a siloed department. 2. Your unit economics matter I could go on about how restaurants' profit margins force you to get the math right. But one habit it encourages is a laser focus on unit level costs. If any element of a takeout order, from packaging to ingredients, is out of balance, your margin disappears. Before you know it, your profit & loss statements have red at the bottom. Tech companies often overlook unit economics, but getting back to the basics of cost structure helps prevent unnecessary burn. Metrics like customer acquisition cost and lifetime value let you stay laser-focused on profitability and ensure you're building a business that can sustain itself. It's surprising to me how many tech entrepreneurs will claim success when they have early clients with 'strong usage metrics' but little or no revenue. If you can't charge for it, is it really adding value? Rigor at the unit level lets you scale responsibly and course-correct as the market shifts. 3. Break down silos and build a culture of teamwork Imagine if the kitchen and front-of-house staff stopped talking during a dinner rush. Orders would back up, wait times would spike, and customers would walk out before their food hit the table. Since coordination is make-or-break in a restaurant, leaders are wired to instill a culture of teamwork. Front-of-house and back-of-house employees don't point fingers at each other, they solve issues together. In tech, building that instinct to collaborate means giving teams visibility into each other's work. Engineers listen in on customer support calls and product managers shadow the QA team. When staff realizes how their work ladders toward the same goals, people start offering support without being asked. In fact, we are so focused on hospitality for our customers that we often see too many people running toward the same problem. But that's the better issue to have—it means teamwork is the norm, not an anomaly. Bringing restaurant discipline to the startup world When margins are tight, customer expectations are high, and every dollar of revenue takes real work, success depends on rallying employees with a culture of shared ownership. That's the kind of leadership restaurant operators practice every day—why should startups be any different? The stakes are distinct, but the playbook holds: get close to your customer, know your numbers inside and out, and build a team that solves problems shoulder to shoulder. The sooner tech leaders embrace this discipline, the better their odds of scaling something that lasts. This post originally appeared at to get the Fast Company newsletter: Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
3 days ago
- Business
- Daily Mail
Warning issued to homeowners as sales plummet
A leading economist has issued a 'red flare' warning for the housing market and cautioned that it could drag down the entire economy. 'I sent off a yellow flare on the housing market in a post a couple of weeks ago, but I now think a red flare is more appropriate,' Moody's Chief Economist Mark Zandi wrote on X this week. A 'red flare' warning suggests the market is experiencing major instability and a fall is imminent. It comes as construction of new homes has slowed and sellers are being forced to reduce their prices or pull their homes off the market entirely. 'Home sales are already uber depressed,' Zandi (pictured) wrote, adding that the housing market could become an issue for the wider economy. 'Housing will thus soon be a full-blown headwind to broader economic growth, adding to the growing list of reasons to be worried about the economy's prospects later this year and early next,' he wrote. If the housing markets woes do tip into the wider economy it could increase recession fears in the coming months, Zandi warned. Zandi's biggest concern is persistently high mortgage rates, currently around 7 percent, which are making buying too expensive for many Americans. High rates have also locked in homeowners who have cheaper deals and cannot afford to move and refinance. 'Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7 percent soon,' Zandi wrote. Sales of new homes dropped 13.7 percent in May compared to the month before, according to Census Bureau data. Zandi said further pressure is being piled on the housing market because homebuilders are simply 'giving up' on rate buydowns - providing a lump sum up front to reduce a buyer's mortgage rate and therefore their monthly payments - as they are now 'too expensive.' The economist also pointed out that many builders are putting off making land purchases for future developments. 'New home sales, starts, and completions will soon fall' as a result, he predicted. It comes as frustrated home sellers are pulling their homes off the market because they can't get the prices they want. A softer housing market has seen delistings surge 47 percent across the country in May compared to the same time last year. Others have been forced to slash their asking prices and accept a more reasonable offer in the current uncertain market. More than 20 percent of listed homes had price reductions in June, the highest share for the month since 2016. While the price of homes across the US continues to move up, the rate at which they are climbing has slowed considerably. May saw price growth at below 2 percent for the first time in over 13 years, according to the report. 'This is a drop compared to earlier this year when home prices were growing at above 3 percent, interest rates were slipping and the forecast for the market was stronger - even while inventory remained low,' Selma Hepp previously told the Daily Mail.
Telegraph
4 days ago
- Business
- Telegraph
It's time the world woke up and noticed the Argentinian miracle
Okay, it is still only on a par with Egypt and Suriname. But the credit ratings agency Moody's this week gave Argentina its second upgrade since its radical libertarian president Javier Milei took power. It is yet more evidence of the dramatic improvement in the country's fortunes. Growth has accelerated, inflation is coming under control, rents are falling and its debts are steadily becoming more manageable. The dire warnings from the economic establishment that Milei's bold experiment in slashing the burden of the state have been proved woefully wide of the mark. The only question now is this: when will the rest of the world wake up to the Argentinian miracle? While France scraps bank holidays to keep the bond markets happy, while the Chancellor Rachel Reeves struggles to fill the latest 'black hole' in the nation's books, and while even the United States bond market frets about the independence of the Federal Reserve, one country – and a very unlikely one as well – is getting upgraded. Moody's this week bumped up Argentina, a nation that for 50 years has been characterised by bailouts and mismanagement, from Caa3 to Caa1. It cited 'the extensive liberalisation of exchange and (to a lesser extent) capital controls' for the improving outlook. Sure, it is still technically rated as 'junk' – after all, this is a country with nine debt defaults, including the largest in IMF history, over the last 200 years. But the direction of travel is clearly right. That is just one indicator among many. The economy overall is expected to expand by 5.7pc this year despite the huge cuts to public spending and the 'chainsaw' applied to government employment by the president. Inflation came down to a monthly rate of 1.6pc last month, which may not exactly count as Swiss-style stability, but is a lot lower than the 200pc-plus it was running at when Milei took office. The IMF has rolled over the massive loan it extended to the country under the previous administration. Rents, a major problem with housing unaffordable to many people, have fallen by 40pc over the last year after the government scrapped all rent controls, bringing a flood of properties on to the market. Bond prices are rising, with the government able to borrow money on the global markets again. Sure, there are plenty of challenges ahead. Poverty is widespread, and there are still relatively few new industries, although its shale oil and gas sector is starting to boom, with Vista Energy reporting a 57pc increase in output this year, and forecasting it will double over the next 24 months. One point is surely clear, however: in the 18 months since Milei took office, Argentina's economy has been transformed. It has been achieved by radically slashing the size of the state. Promising a 'shock therapy' for the economy, the government has laid off more than 50,000 public sector workers, closed or merged more than 100 state departments and agencies, frozen public infrastructure projects, cut energy and transport subsidies, and even returned the state budget to a surplus. Milei has not followed through on all his promises. Argentina has not switched to the dollar as its official currency, as he pledged it would, and doesn't look likely to any time soon (although come to think of it, on current trends its peso may be a better bet than the American currency). But he has gone further and faster in deregulating the economy than any politician in modern times. The improvements in its performance are a stark contrast to the catastrophe that was forecast, and probably quietly hoped for, by a majority of the Left-leaning economic establishment. On taking office, 103 prominent economists, including France's Thomas Piketty, wrote a public letter warning that 'apparently simple solutions may be appealing, they are likely to cause more devastation in the real world'. It hasn't happened. Instead, Argentina is steadily recovering from decades of mismanagement. The real question is this: when will the rest of the world wake up and notice? The bulk of the policy-making and financial establishment still inhabits a mental universe where government spending is what drives growth, where regulation is seen as the key to innovation, where 'national champions' are expected to lead new industries, while industrial strategies will pick the winners of the future, and the only role for the private sector is a 'partner' for the finance ministry. We see that in the UK, with the National Wealth Fund getting billions in funding even though no one knows what it will actually do, and with GB Energy getting even more for the green transition. We see it across the European Union, with endless regulations that are bizarrely designed to promote competitiveness, and with the Commission in Brussels only this week proposing a turnover tax on every business of any significant size within the bloc. We even see it in the US, with Donald Trump, hardly an economic liberal, imposing tariffs to try to reshape the economy instead of leaving it to the market to decide where companies should invest. And we see it most of all in China, with industries from autos to aerospace to artificial intelligence receiving huge state support to conquer the world. Argentina under Javier Milei is the only major country taking a different path. Perhaps because subsidies, controls and protectionism have turned it into a basket-case, it was ready to try the alternative. The results are now clear. In reality, open, free markets and a smaller state are the only way to restore growth, and Milei is proving it all over again.
Daily Mail
5 days ago
- Business
- Daily Mail
Home owners issued dire two-word warning by expert as sales fall through the floor
A leading economist has issued a 'red flare' warning for the housing market and cautioned that it could drag down the entire economy. 'I sent off a yellow flare on the housing market in a post a couple of weeks ago, but I now think a red flare is more appropriate,' Moody's Chief Economist Mark Zandi wrote on X this week. A 'red flare' warning suggests the market is experiencing major instability and a fall is imminent. It comes as construction of new homes has slowed and sellers are being forced to reduce their prices or pull their homes off the market entirely. 'Home sales are already uber depressed,' Zandi wrote, adding that the housing market could become an issue for the wider economy. 'Housing will thus soon be a full-blown headwind to broader economic growth, adding to the growing list of reasons to be worried about the economy's prospects later this year and early next,' he wrote. If the housing markets woes do tip into the wider economy it could increase recession fears in the coming months, Zandi warned. Zandi's biggest concern is persistently high mortgage rates, currently around 7 percent, which are making buying too expensive for many Americans. High rates have also locked in homeowners who have cheaper deals and cannot afford to move and refinance. 'Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7 percent soon,' Zandi wrote. Sales of new homes dropped 13.7 percent in May compared to the month before, according to Census Bureau data. Zandi said further pressure is being piled on the housing market because homebuilders are simply 'giving up' on rate buydowns - providing a lump sum up front to reduce a buyer's mortgage rate and therefore their monthly payments - as they are now 'too expensive.' The economist also pointed out that many builders are putting off making land purchases for future developments. 'New home sales, starts, and completions will soon fall' as a result, he predicted. It comes as frustrated home sellers are pulling their homes off the market because they can't get the prices they want. A softer housing market has seen delistings surge 47 percent across the country in May compared to the same time last year. Others have been forced to slash their asking prices and accept a more reasonable offer in the current uncertain market. More than 20 percent of listed homes had price reductions in June, the highest share for the month since 2016. While the price of homes across the US continues to move up, the rate at which they are climbing has slowed considerably. May saw price growth at below 2 percent for the first time in over 13 years, according to the report. 'This is a drop compared to earlier this year when home prices were growing at above 3 percent, interest rates were slipping and the forecast for the market was stronger - even while inventory remained low,' Selma Hepp previously told the Daily Mail. 'Now, inventory is climbing, but people are hesitant to buy. Concerns about affordability, economic outlook and elevated mortgage rates are holding buyers back. Similarly, there are now fewer cash buyers in the market indicating that the types of shoppers may be changing.'
