Moody's may upgrade South Africa

Moody's Investors Service said it placed South Africa's Baa2 country ceilings for foreign currency debt and bank deposits on review for possible upgrade in recognition of the country's significant improvement in external liquidity, its modest reliance on external debt financing, and its well-managed macroeconomic policies.

These ratings have carried a positive outlook since February 2003.

Accordingly, Moody's also placed on review for possible upgrade the ratings of the Republic of South Africa's Baa2-rated foreign currency bonds and notes. The outlook for the government's rand-denominated debt remains stable, since public finance characteristics appear generally consistent with the existing A2 rating on domestic debt obligations.

Moody's pointed out that South Africa's economic policy has been well-managed for many years, with restrained fiscal and monetary policies leading to relatively low government debt ratios and foreign-currency exposure. The agency says that the three-notch differential between the government's domestic and foreign currency ratings has mainly reflected the country's historically weak external liquidity. This vulnerability contributed to considerable volatility in capital account movements and thus in the exchange rate, in turn with profound effects on growth and employment.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.