30 Mar 2019

SA credit rating unchanged, no update from Moody’s

Tertia Jacobs

Treasury Economist, Investec

South Africa’s credit rating remains the same at investment grade (Baa3).

Receive Focus insights straight to your inbox

Sending...

Please complete all required fields before sending.

Thank you

We look forward to sharing out of the ordinary insights with you

Sorry there seems to be a technical issue

Moody’s has not updated ratings for South Africa. Nor has it done so for the state of Carinthia, the government of Cyprus, the state of Lower Austria, the government of Sweden, the city of Vienna or the government of Zambia.

 

The global rating agency was expected to deliver a country review for South Africa on Friday 29 March 2019.

 

It was widely thought that Moody's would drop the country's outlook from stable to negative while leaving the actual rating unchanged at 'investment grade'.

 

In March 2018, Moody's left SA's key credit ratings at investment grade (Baa3) and upgraded the sovereign's outlook from negative to stable.

The agency built into its analysis at the time both the market and perceived business sector’s euphoria resulting from the election of Cyril Ramaphosa to president.

 

Moody’s specifically identified back then that “the recent change in political leadership appears to have halted the gradual erosion of the strength of South Africa's institutions. With changes in governance, a number of key institutions, including the Treasury, the South African Revenue Service (SARS) and key State-Owned Enterprises (SOEs) have embarked on the recovery of their earlier strength.”

 

 It also highlighted at the last country review in March 2018, that “recent years have seen a gradual erosion in the strength of some key institutions, with a correspondingly negative impact on economic and fiscal strength and on the effectiveness of policymaking.”

 

And furthermore “high and rising concerns regarding endemic high-level corruption, 'state capture' and pressures on the mandate and independence of key policy-making institutions such as the Reserve Bank have materially damaged economic confidence and effective policy-making, exacerbating the erosion in the  government's balance sheet.”

 

Moody’s is set to review SA again on 1 November 2019 and continue its biannual review process in 2020.

  • Disclaimer

    This content is distributed with the approval of Investec Securities (PTY) Ltd. It is for informative purposes only and is not independently verified. The views expressed herein reflect the personal views of the author as at the date of publication/distribution and Investec Securities (PTY) Ltd has no obligation to update the content.

     

    All opinions are based on information which the author considers to be reliable but we do not represent that it is accurate or complete and should not be relied on as such.

     

    The author is subject to Investec Group’ Conflicts of Interest policy and no part of the author’s compensation was or will be directly or indirectly related to the specific securities or issuers referred to herein.

     

    Investec Limited and its subsidiaries may do business any companies mentioned and Investec’s trading desks may have long or short positions in securities or supply other products and services to these specific companies. The author may interact with other areas across the Investec Group regarding market conditions and prices.

     

    Any illustrations, forecasts, hypothetical data or examples used are purely for comparative purposes and not to be read as factual and are not guaranteed. Past performance is not necessarily indicative of future performance. The content does not constitute advice in any form, nor does it take into account the individual circumstances, objectives or financial position of the reader/clients of the reader.

     

    THIS DOCUMENT IS NOT FOR DISTRIBUTION TO US INVESTORS AND SERVICES AND INVESTMENTS MENTIONED HEREIN ARE NOT FOR SALE TO US PERSONS AND THE CONTENT MAY NOT BE DISTRIBUTED OR RE-PRODUCED WITHOUT EXPRESS CONSENT FROM THE AUTHOR. INVESTEC SECURITIES (PTY) LTD ACCEPTS NO LIABILITY FOR ANY LOSS OR DAMAGE OF ANY KIND ARISING OUT OF THE USE OF ALL OR ANY PART OF THIS COMMUNICATION.

     

    Investec Securities Proprietary Limited registration number 1972/008905/07.  Member of JSE Equity, Equity Derivatives, Currency Derivatives, Bond Derivatives and Interest Rate Derivatives Market. An authorised financial services provider number registration number 15886.  A registered credit provider registration number NCRCP262.