Moody’s cites strengths and weaknesses for SA’s rating
Moody’s cite youth unemployment and an unwillingness to reform state-owned enterprises as reasons to keep SA’s Baa2 with negative outlook rating
High youth unemployment and an unwillingness to reform state-owned enterprises were two concerns raised by ratings agency Moody’s in a credit opinion on SA released on Wednesday. Under Moody’s system, SA has a credit rating of Baa2 with negative outlook, which is equivalent to a BB rating from Fitch or S&P Global ratings. This makes Moody’s more positive about SA’s credit rating than Fitch and S&P which both rate SA as BBB — one step above "junk" — with negative outlook. Moody’s stressed that Wednesday’s report was not a new rating for SA, but a rationale for its existing rating. The ratings agency listed four key strengths it sees in SA. First, its well developed domestic financial markets and well capitalised banking sector. Second, the accountability and independence of key institutions, such as the judiciary, the Reserve Bank and the National Treasury. Third, a sound macro-economic framework. And fourth, a low foreign currency debt. Its list of four credit weaknesses were first,...
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