Moody's rates South Africa bonds Baa1

Moody's Investors Service said it assigned a Baa1 rating to the new benchmark-sized 10-year euro-denominated bond to be issued by the Republic of South Africa.

South Africa's creditworthiness has steadily improved in the nearly 12 years since the first fully democratic election in 1994, the agency said. Economic growth has been driven higher the past two years by the dynamism of domestic demand, contributing to further improvements in the public financial position as fiscal deficits remained low and debt ratios declined and the primary balance - the budget after making interest payments - has been in surplus for more than a decade. Such trends clearly validate the A2 rating on the government's rand-denominated bonds, Moody's said.

The stronger fiscal situation also provides the authorities with needed flexibility as they attempt to overcome worsening infrastructure shortfalls as well as massive income disparities and other negative socio-economic legacies of apartheid, the agency added.

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