Credit rating giant, Moody’s said on Tuesday that South Africa’s sovereign credit rating was still investment grade.
The new rating opinion has further boost the rand several days after the ratings agency delayed a review of the country’s creditworthiness.
Moody’s is the last of the big three ratings agencies to give South Africa an investment-grade rating, so markets are sensitive to any pronouncement it makes on the fiscal and economic strength of Africa’s most industrialised economy.
Its credit opinion report, which does not constitute a rating action, Moody’s said that South Africa’s credit rating was still Baa3, the lowest rung of investment grade, with a stable outlook.
“While economic growth will remain slow and fiscal strength will continue eroding, we expect South Africa’s credit profile to remain in line with those of Baa3-rated sovereigns,” the report said.
“South Africa’s credit profile is supported by a diversified economy, a sound macroeconomic policy framework and a deep pool of domestic investors thanks to well-developed financial sector and markets,” it said.
The rand rallied on Monday after Moody’s said late on Friday that it would not publish a review of South Africa’s debt rating as planned.
In accordance with European Union regulations, Moody’s provides dates for the potential release of both solicited and unsolicited sovereign credit-rating actions, but it can alter those dates at its discretion.
Some South Africa-focused investors had worried that wider deficit projections in this year’s budget and a spate of national power cuts could prompt Moody’s to downgrade the outlook, or even the rating, on Friday.
The rand added to Monday’s gains after Moody’s published its report on Tuesday.