Analysts weigh in ahead of next Moody’s announcement

As credit ratings agency Moody’s moves closer to deciding South Africa’s sovereign credit rating, analysts have warned that the only thing standing between SA and a downgrade by the agency is the credibility of the treasury.

Thus far it’s the only agency that has sustained an invest-grade rating for the country. Industry peers Fitch and S&P Global have already downgraded South Africa to below investment grade, generally referred to as “junk”.

Speculation that Moody’s may follow suit was fuelled by its summing up of finance minister Tito Mboweni’s budget speech as indicative of the country’s “limited fiscal flexibility”.

It raised particular concern about government’s R62-billion bail-out of Eskom.

Interestingly, S&P last Friday announced that it had revised the power utility’s outlook from negative to stable.

Moody’s, however, has stated that “unless and until a clear adjustment path is tabled, Eskom will remain the source of contingent liability risks, weighing on SA’s fiscal strength.”

Its next ratings announcement is expected on March 29, unless it decides to wait until after the elections in May.

More News