Moody’s places South Africa's rating on review for downgrade
The downward review is due to the recent cabinet reshuffle.Moody's Investors Service, the rating agency, has put the government of South Africa's senior unsecured bond and Baa2 long-term issuer ratings on review for downgrade due to abrupt change in leadership of key government institutions. On 30th of March, the President of South Africa, Jacob Zuma announced broad changes in the country's government, affecting top leadership in 10 ministries, including finance and energy ministries. With the review, Moody's will be able to assess the risks and if the changes in leadership signal fragility in the nation's economic, institutional and fiscal strength. The rating review under the downgrade covers (P)Baa2 Senior Unsecured Shelf, MTN program, ZAR Sovereign and Capital Fund Propriety Limited, which is fully and unconditionally guaranteed by the government. However, the long-term local-currency bond and bank deposit country ceiling remain unchanged at A1, A2, Baa2, Prime-1 (P-1) and Prime-2 (P2) respectively. Despite the rating review, the various changes in the government are aimed at spurring potential growth and solidifying public finances in order to strengthen the sustainability of government finances and accommodate exposure to contingent liabilities.