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Moody’s to visit SA next week to decide on ratings – Treasury

After agency puts country on review for downgrade.

JOHANNESBURG – Ratings firm Moody’s will visit South Africa in the next week to decide whether to downgrade its credit status to just one notch above sub-investment grade, the Treasury said on Wednesday.

“This review visit will primarily serve to either affirm the current ratings or downgrade them,” it said in a statement.

On Tuesday, Moody’s said it was placing South Africa’s long and short term ratings (Baa2 and P-2 ) on review for downgrade, citing the economy’s weak growth prospects and the government’s worsening fiscal position.

Treasury said during its visit Moody’s will “assess the views of various stakeholders in government, civil society, labour and in the private sector on a number of areas”. This includes whether the decline in South Africa’s economic strength will be reversed in the medium term, sufficient progress can be made to stabilise and restore fiscal strength, and whether policy is likely to lead to a reversal in the continuing erosion of the government’s balance sheet.

Treasury said in its meetings with the agency it will highlight its “collaborative actions” to accelerate inclusive growth, measures adopted in the 2016 budget to accelerate fiscal consolidation and give effect to the National Development Plan, steps taken to reinforce stable industrial relations, the accelerated implementation of its R870 billion infrastructure investment programme, progress made in resolving the energy constraint, as well as initiatives to implement the recommendations of the Presidential Review Commission on SOCs.

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My views: An exchange rate is a barometer of economic activity in a country. The cANCer policies started in 1994 when the exchange rate was USD/ZAR 3.4 After 22 years in office , they ‘’managed’’ the exchange rate down to USD/ZAR 16.00 and we are on a cliff edge at the moment.
The ANC government is now being dictated to by the trade unions and the socialists and communists in their midst. Unfortunately the rating agencies like Moody’s cannot be dictated to as they are under international obligation and scrutiny as the agencies can’t afford another ‘’Enron ‘’ fiasco, where Billions of US Dollars were lost by investors.
I am convinced that the agencies will start downgrading South Africa’s sovereign debt soon. The resultant capital flight and total disinvestment will make the old National Party’s 1985 debt moratorium look like a Sunday-school picnic. Banks like Barclays and Citibank made like ‘’Donald and Duck, first.
Barclays almost jumped the starter’s gun but it’s a Déjà vu situation again as a result of the investment money they lost so far. The markets will become very volatile again as soon as the downgrading rumours return.

Rand annualised depreciation:
Under Nats from 1980 to 1994 (0.77 to 3.4 per USD) 10.1% pa
Under ANC from 1994 to 2016 (3.4 to 16.0 per USD) 6.8% pa

Not that the Nats are a good benchmark but just putting it out there.

Show us your calculation please !

I suppose you think that the Rand dropping from R3.40 to R16.00 to the US $ is an achievement then? You must be very proud then on behalf of the ANC?
You do know then that your calculations do not add up either?
Can we see your benchmark figures on unemployment increases over the same periods too, and while you are about it, you might just as well show us your crime stats.
I bet you eleventy nine to one you have issues with maths and stats????

Serene, i think you have this wrong. show us your calcs.

The downgrade to junk bond status cannot happen fast enough. Bankruptcy will shake the ANC government out of its slumbers and make it face its own monumental failure as twenty years of looting catch up with it.

This party is presently mired in tribalism, still believes communism is a workable system in the 21st century, has a visceral hatred of anything western and is utterly convinced of its own unassailable correctness, even as it continues its plunder-fest in the name of upliftment.

The orgy is going to end soon, South Africa needs to go through this downgrade process before it can get better. The ANC has certainly succeeded in one of its struggle goals – to make the country completely ungovernable.

not strictly true – they LOVE black Range Rovers, Mercedes, BMW, Porsche… bling like Gucci, Burberry, Armani… US Dollars and other western “filth”

“the orgy is going to end soon” – dream on. hasn’t even started. junk status will come and people will get on with their lives – except they will have to pay more tax and interest – but the fat cats will just carry on. the only thing that will “save” the country is what happened in cuba in the 60’s when castro took over – complete re-write

The fact is those “protestors” at the universities only knows how to be destructive, envious and how to hate those who have more than they do. You can twist history as much as you like in order to serve your purpose, but at the end of the day, we all know the truth. The truth is that despite vast mineral and agricultural riches, the people of Africa have an inability to work together to achieve a common goal. The ruling elite will look after themselves, friends and family and the ignorant masses are only good for their vote at election time. It is as Leonard Cohen sang: “Everybody knows, everybody knows…Everybody knows.”

Baa2 is still of course 2 notches above junk.

which suggests that a downgrade is inevitable, if only to bring Moody’s in line with S&P. that said …. it won’t be a downgrade to junk and that isn’t really on the horizon from any of the agencies at this stage.

“…Moody’s will assess the views of various stakeholders in government, civil society, labour and in the private sector on a number of areas…” And I suppose they will NOT look at the track record of the glorious leader, who will be hidden away somewhere the Moody’s people can’t get to him. Or he will arrange to be on his Pres-jet to sort out another African state’s problems. This is a massive task and needs his full attention, because Africa is bigger than all the other continents combined. I wouldn’t want his job, especially when he visits Beijing, which is now about 20 Km north of Bloemfontein.

End of comments.

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