SA on tenterhooks as Moody’s prepares to issue a reprieve or drop the axe
South Africans will know by midnight on Friday night whether the country has entered the downward spiral of an across-the-board junk rating of government debt, or won another reprieve. If Moody’s joins Fitch and S&P Global Ratings in downgrading SA’s rand-denominated government bonds as junk, one outcome will be SA’s removal from the Citi world government bond index — leading to a heavy outflow from the bond market as many fund managers will be obliged to put their money elsewhere. That outflow could amount to as much as R100bn. Moody’s put SA on review in November. In SA’s favour is a positive reception of February’s budget, by all three of the main rating agencies — something recently reappointed Finance Minister Nhlanhla Nene highlighted during a recent roadshow to convince international investors of the government’s plans to get SA back on track. Also in the plus column is a surprisingly strong set of economic growth data for the fourth quarter of 2017 — with growth for the year...
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