South Africa’s Credit Rating Postponement: A breather?


Friday, April 05, 2019 6:00PM / United Capital Pan African Monitor


Last Friday, market and media attention in South Africa was directed towards Moody’s scheduled rating update for South Africa. Being the last of the three big rating agencies to give South Africa an investment -grade rating, capital market participants were divided on the ability of the country to retain its Baa3 - the lowest rung of investment grade.


Interestingly, Moody’s opted to defer any rating action on the Country till 1st of November, likely in view of the Presidential Election scheduled for May 2019, while providing the country with some breathing space in the meantime. This was welcomed with great cheer as the rating agency decided to give a credit opinion instead.


Accordingly, the rand (ZAR) recorded its strongest rally in five months on Monday and government bond yields hit their lowest level since May-18. Though, the next big risk for bond investors is the general election set for May 8 and its implication for government policies. We believe bond investors will continue to lap up higher interest rate currently offered by the government; thus, providing near-term support for the Rand.


More importantly, we believe post-election reforms that would stimulate the economy, especially in relation to its debt-ridden power sector, and fiscal policy, would be important in ensuring that the S/African economy -Africa’s most industrialized market sustains its only investment-grade rating (only by Moody’s), come Nov19. 


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Egypt offers euro-denominated bonds on London stock exchange - bank document: Egypt aims to raise 2 billion euros ($2.2 billion) in six-year and 12-year euro-denominated bonds in a sale starting on Thursday, according to a document by one of the banks leading the deal. Reuters


South Africa's Eskom chairman wants debt to be $18 bln lower: The chairman of South Africa’s struggling power firm Eskom said on Wednesday that he would like the company’s debts to be roughly 250 billion rand ($18 billion) lower than where they are now. Reuters

Kenya forecasts 6.3% economic growth in 2019:  Kenya’s economy should grow an improved 6.3% in 2019, President Uhuru Kenyatta said on Thursday, citing an improved business environment and his government’s push to boost manufacturing, food production and access to housing. Reuters 


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