Moody's says SA still rated investment grade

Moody's says the current rating off BAA3 is supported by a diversified economy, a sound macro-economic policy framework and a deep pool of domestic investors.

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JOHANNESBURG - Moody's says it expects economic growth to pick up modestly this year to 1.3% and is keeping its rating at BAA3 with a stable outlook, one level above sub-investment grade.

The agency decided not to pronounce on its sovereign rating or the country last Friday.

It now says the current rating off BAA3 is supported by a diversified economy, a sound macro-economic policy framework and a deep pool of domestic investors.

This is good news for government, which has been battling to convince ratings agencies that there is economic change.

Moody's says credit constraints include elevated government debt and contingent liability risks from state-owned enterprises.

But it expects the country’s credit profile to remain in line with those of BAA3-rated sovereign nations.

The agency says it assesses fiscal strength as “moderate" – with susceptibility to event risk as “low”.

This is good news for the economy as there had been fears that the country will be downgraded – due to load shedding and other factors.

The rand and markets were boosted after Moody’s decision not pronounce on its rating on Friday night.