Moody’s on Friday evening cut its sovereign credit rating for SA to Baa3 from Baa2, one notch above junk. As expected, Moody's held its outlook on SA as negative, raising the fear of another downgrade in December. Moody’s said the key drivers for the downgrade were the “weakening of SA’s institutional framework, reduced growth prospects reflecting policy uncertainty and slower progress with structural reforms”. It also highlighted “the continued erosion of fiscal strength due to rising public debt and contingent liabilities”. In the nomenclature used by S&P Global Ratings and Fitch, Baa3 equates to BBB-, placing the credit rating of South African government bonds in the “lower medium grade” range. Moody’s remains more positive about SA than its two main competitors who both cut their sovereign ratings from BBB- to BB+ in April shortly after President Jacob Zuma fired finance minister Pravin Gordhan and his deputy Mcebisi Jonas. Moody’s was originally scheduled to issue its ratings d...
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