The fallout from the conflict in the Middle East risks materially weakening structural reform efforts by the Kenyan government over the last two years. Eurobond spreads have reacted and Kenya’s Eurobond yields have increased by 104 bps since the start of the conflict—more than the broad EM index and Egypt, and only lower than Senegal and Mozambique. We believe the Eurobonds are likely to continue to underperform, whilst the local currency is likely to depreciate further, albeit at a slower pace. Investor concern about the sovereign’s outlook continue with questions themed around policy credibility resurface in the absence of an IMF programme. We however believe that the proactive liability management