Playing the Zuma blues
Downgrade peril for SA deals
The collapse of Pioneer Foods’ deal with an unnamed multinational may be the first such casualty as the downgrade begins to bite
The rand has been relatively stable, local investors have been coaxed into submission by the new finance minister and the markets have already priced in the cabinet reshuffle — but the sovereign credit-rating downgrade still claimed its first casualty last week. Pioneer Foods’ mystery deal (analysts speculate it was a merger, not an acquisition) with a major multinational fell through last Friday, and the company has placed the blame on the recent credit-rating downgrades that followed President Jacob Zuma’s March cabinet reshuffle. Some analysts believe other deals could collapse this year as the downgrades reality hits. But surprisingly, SA made a comeback to the AT Kearney foreign direct investment (FDI) confidence index for the first time since 2014. FDI inflows rose 38% to an estimated $2.4bn last year after falling to their lowest level in 10 years in 2015. Pioneer Foods, the producer of Sasko and Liqui-Fruit, said on March 7 it had been approached to explore a "material trans...
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