SA escapes ratings downgrade by Moody's
Cape Town – Moody’s Investor Services did not publish a ratings review of South Africa on Friday as was widely anticipated.
The agency believes that South Africa has not had any real major events that would require a review, according to eNCA.
Moody's has South Africa's long-term foreign and local currency debt ratings at Baa3, with a negative outlook. It is the only ratings agency that has South Africa’s foreign-currency and rand-denominated debt at investment grade.
On June 9, Moody’s downgraded the South Africa’s credit ratings, some two months after both Standard & Poor’s and Fitch had downgraded the foreign currency rating to junk status, following a far-reaching cabinet reshuffle at the end of March.
Both ratings agencies argued in their statements explaining the ratings decision that the executive changes initiated by President Jacob Zuma had put at risk fiscal and growth outcomes and caused policy uncertainty.
In Moody's previous explanatory statement about the decision to downgrade the country, it said South Africa's institutional framework, reduced growth prospects reflecting policy uncertainty and slower progress with structural reforms, and the continued erosion of fiscal strength due to rising public debt and contingent liabilities, put the country at risk for further downgrades.
Since Moody’s June downgrade, there has been considerable political and policy instability in South Africa with the launch of an investor-unfriendly Mining Charter, the Public Protector’s instruction that the South African Reserve Bank’s mandate be changed and opposition parties' failed attempt to have Zuma ousted by means of a no confidence vote.
Moody’s and S&P’s next reviews are scheduled for November 24.
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