Moody's Investors Service has today placed the Baa2 bond and issuer ratings of the government of South Africa on review for downgrade. Also placed on review for downgrade were South Africa's (P)Baa2/(P)P-2 shelf and MTN program ratings.
The decision to place the ratings on review was prompted by the continuing rise in risks to the country's medium-term economic prospects and to its fiscal strength, notwithstanding the tighter fiscal stance undertaken in the 2016/17 budget. The review will allow Moody's to assess to what extent government policy can stabilize the economy and restore fiscal strength in the face of heightened domestic and international market volatility.
In a related rating action, Moody's has also placed on review for downgrade the Baa2 rating of the ZAR Sovereign Capital Fund Propriety Limited, which is fully and unconditionally guaranteed by the Republic of South Africa.
