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Moody’s keeps SA’s credit ratings unchanged

Moody’s says state institutions look set to gradually reverse their positions, under a more transparent and predictable policy framework.

FILE: A Moody's sign stands in front of the company headquarters in New York. Picture: AFP.

JOHANNESBURG - Rating agency Moody’s has kept South Africa's credit ratings unchanged but revised the country’s outlook to stable from negative.

Government, business and labour had been worried about Moody’s joining the other two major agencies in placing South Africa into a sub-investment grade.

A cut to junk by Moody’s would have seen South Africa removed from Citi’s Influential World Government Bond Index, which could have triggered up to R100 billion in selling by foreign investors.

However, instead, the rating agency says the previous weakening of state institutions is gradually reversing, supporting economic recovery.

It says due to this change the country’s outlook has been moved to stable.

Moody’s says state institutions look set to gradually reverse their positions, under a more transparent and predictable policy framework.

Moody's rates the country’s debt at baa3, the lowest rung of investment grade.

S&P Global and Fitch cut the country to sub-investment grade last year.

RETURN OF SORELY NEEDED INVESTOR CONFIDENCE

Moody’s says it’s raising the country’s outlook to stable as it believes the previous weakening of South Africa’s institutions will gradually reverse under a more transparent and predictable policy framework.

A downgrade by Moody’s to sub-investment grade would have had dire consequences.

S&P Global downgraded South Africa’s local currency debt to “BB+” or junk status in November, citing a deterioration in the country's economic outlook and public finances.

A year ago, Fitch downgraded its rating to sub-investment grade after then president Jacob Zuma abruptly fired Pravin Gordhan as Finance Minister.

It kept both local and foreign currency credit ratings unchanged at BB+ in November.

However, Moody’s says South Africa has now seen a return of sorely needed investor confidence.