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Question of the Week - Fixed Income

AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
edited June 2015 in Level 1 Questions
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?

Question of the Week - Fixed Income 18 votes

Kenyan Shillings
38%
AdaptPrepCFAI_wont_stop_meArsenalFanjsmulhollandivschooly_dnilsenp06TheClaw 7 votes
British Pounds
33%
ThomasWYannickTsri12PicknrollsamyakjaroliRichie321 6 votes
Both will be the same
27%
ZeeLeChiffregstylekiyoharuKevin 5 votes

Comments

  • AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
    Kenyan Shillings

    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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