Nov. 10 (Bloomberg) -- Kenya may have the outlook on its credit rating lowered to ‘stable’ from ‘positive’ if the country fails to implement political reforms promised in a power-sharing agreement reached last year, according to Standard & Poor’s.

The ratings company affirmed the East African country’s long and short-term sovereign rating at ‘B’ with a positive outlook, according to a statement released today. The rating is five notches below investment grade on the S&P scale.

“The outlook remains positive, but could be revised to stable in the absence of progress on political reform,” S&P said in the statement. “The ratings remain constrained by the political risks highlighted by the 2008 post-election crisis which, if inconclusively addressed in the coming months, could result in a revision of the outlook back to stable.”

East Africa’s biggest economy suffered two months of violent unrest last year after a disputed presidential election in December 2007 resulted in political and ethnic clashes that left 1,500 people dead and displaced another 300,000. The violence ended after a power-sharing accord was reached that commits President Mwai Kibaki and rival Prime Minister Raila Odinga to changes ranging from a new constitution to an amended land ownership system.

“The formation of a grand coalition has by no means remedied the underlying causes of the political and tribal violence of early 2008,” said S&P. “Progress on political reform has been uneven and hampered by coalition infighting, and conclusive outcomes remain uncertain.”

To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

Last Updated: November 10, 2009 08:52 EST