Moody's delays updating SA's sovereign credit rating
SA, along with the Czech Republic and Saudi Arabia did not receive updated sovereign credit ratings from Moody's on Friday.
The ratings agency issued a media statement at about 11.30pm on Friday night saying its ratings for these three countries would not be updated as diarised.
Portugal's credit rating was upgraded to Baa3 — raising it from junk to to the lowest tier of investment grade, the same level as SA — and the Republic of Congo's credit rating was affirmed at Caa2 with its outlook raised to stable from negative.
"No new date was immediately available from Moody’s but we suspect it will be the second half of November or early December if it occurs this year — else March next year," Intellidix analyst Peter Attard Montalto said in a note e-mailed at about midnight on Friday.
"We expect Moody’s to keep ratings unchanged this year and only downgrade the outlook after next year’s budget as further budget and growth downward surprises come to a head with limited signals of further reforms. Downgrading the rating level before the elections however is hard given we expect Moody’s to still continue its form of liberally applying too much benefit of the doubt around growth positive reforms to come.
"Yet Moody’s is on track in the long run to cut into junk in our view as it is slowly abandoning the long run view that debt to GDP will fall with growth boosting reforms. Pencilling in such a date remains hard and looks most likely after the 2019 medium-term budget policy statement when a mixture of political infighting, lack of reform and further budget slippage all come to a head," Attard Montalto said.