Moody's: South Africa sub-sovereigns to negative

Moody's Investors Service said it changed to negative from stable the outlooks on the long-term ratings and senior unsecured debt obligations of seven South African sub-sovereign issuers.

Those include Buffalo City, Cape Town, Ekurhuleni, Johannesburg, Nelson Mandela Bay (Port Elizabeth) and Tshwane (Pretoria), as well as South Africa's national road agency (Sanral).

The actions were prompted by the change in outlook on South Africa's A3 government bond rating to negative from stable, Moody's said.

Under the current framework, Moody's said it does not view the six affected metropolitan municipalities as having special characteristics that could support stronger credit quality than that of the sovereign, the agency said.

Although these entities have comparatively rich economic bases, sound financials and good governance practices, they remain dependent on the central government's decisions, which maintains a high degree of control over the sector via legislation, Moody's said.

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