Credit ratings
Mboweni: Fitch & Moody's credit rating downgrades painful
Reacting to the news, Finance Minister Tito Mboweni said that there was an urgent need for government and its social partners to implement structural reforms to...
Moody's has downgraded the country's credit rating one notch to BA2 and maintained a negative outlook, while Fitch has downgraded South Africa's credit rating from BB to BB- and with a negative outlook.
The ratings agency downgraded South Africa’s credit rating further into “junk” territory in April, citing the lack of a clear path towards government debt stabilisation and the expected impact of the COVID-19 shock on public finances and growth.
S&P projects the South African economy will shrink by 4.5% this year compared with the November 2019 estimate of growth of 1.6%.
The power utility said that it understood the impact load shedding had and was working tirelessly to solve its problems.
Moody's is the last of the three big ratings agencies to keep the country in positive territory.
The agency is the last of the top three ratings firms to still rank Pretoria debt at investment grade, Baa3 with a stable outlook.
Late on Friday night, the agency kept the country's sovereign credit ratings unchanged at below investment grade.
Whichever political party wins the elections, it would need to act quickly to address persistently low growth rates, high unemployment, and an ever-widening public debt.
After 8 May, the president - likely to be incumbent Cyril Ramaphosa as ANC leader - will have a tough task creating jobs, attracting foreign money and tackling corruption.
Moody's said that the country is still facing a few major problems, including persistently low growth and high unemployment.
Economist Goolam Ballim said that the upcoming elections will be defining for South Africa's investment market depending on the outcome.
Moody’s Investors Service is on Friday evening expected to make an announcement on South Africa’s credit rating.
Trade and Industry Minister Rob Davies says that he hopes that Moody's will recognise government's efforts to rebuild the economy.
A common narrative for the start of the financial crisis suggests that credit agencies downplayed the riskiness of RMBS, drawing in lenders who did not appreciate their intrinsic risk.
The South African government is determined to achieve improved credit ratings, the Treasury said on Friday after S&P Global Ratings affirmed the sovereign’s debt at sub-investment grade ‘BB’/‘BB+’.
Africa’s most industrialised economy has barely grown in the past decade, with fiscal missteps and government corruption contributing to weak business and consumer confidence.
S&P Global Ratings’ sovereign analyst Gardner Rusike said the future rating path would be influenced by whether new President Cyril Ramaphosa follows through on promises to reform the economy.
Moody’s said its decision to keep South Africa’s rating at investment grade reflected its view the country’s institutions would regain strength under more transparent and predictable policies - though the new government had to stay on track.