Moody’s expected to hold its outlook for SA at stable
However, with a new finance minister in Tito Mboweni, Moody’s may simply announce it is delaying the release of the report
Moody’s Investors Service is generally expected, at about midnight on Friday, to affirm its credit rating of South African government bonds at Baa3 — its lowest level of “investment grade” — and hold its outlook at stable. A shock downgrade would be disastrous for SA as Moody’s is the only one of the big three international credit ratings agencies to still view South African government bonds above junk.
“If Moody’s were to downgrade SA’s debt to sub-investment level, SA would be removed from the Citi World Government Bond Index, prompting asset managers and pension funds to sell domestic bonds. This would sharply increase the cost of debt and pressure the exchange rate,” PwC Strategy& economist Maura Feddersen said in a note e-mailed on Friday. Given that SA recently switched finance ministers, with Tito Mboweni now scheduled to deliver the medium-term budget policy statement (MTBPS) on October 24, Moody’s may simply announce it is delaying the release of the country’s soverei...
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