Re­lief over rate freeze

Moody’s sig­nals a no-change po­si­tion

Sunday Tribune - - METRO - PHILIPPA LARKIN philippa.larkin@inl.co.za African News Agency (ANA )

LO­CAL mar­kets can breathe a bit more eas­ily af­ter Moody’s In­vestors Ser­vice failed to re­lease its rat­ing state­ment on Fri­day, mean­ing South Africa’s sov­er­eign rat­ing re­mained un­changed at Baa3 sta­ble in a week that saw lo­cal stocks tum­bling, in line with those glob­ally, and rand volatil­ity on the change of guard at the helm of the fi­nance min­istry.

Mamello Matik­inca, FNB’S chief econ­o­mist, said on Fri­day that the credit rat­ing agency had es­sen­tially com­mu­ni­cated a no-change stance un­til at least af­ter the na­tional elec­tions next year. “While they are, like ev­ery­one else, ex­pect­ing a de­te­ri­o­ra­tion in the fis­cal met­rics at the medium-term bud­get pol­icy state­ment (MTBPS), they ac­knowl­edge that the low for­eign cur­rency ex­po­sure and ma­tu­rity pro­file of South Africa’s debt should pro­vide a plat­form for re­cov­ery,” Matik­inca said.

Pe­ter At­tard Mon­talto, the head of cap­i­tal mar­kets re­search at In­tel­lidex, said In­tel­lidex ex­pected Moody’s to keep rat­ings un­changed this year and only down­grade the out­look af­ter next year’s Bud­get as fur­ther bud­get and down­ward-growth sur­prises came to a head with lim­ited sig­nals of fur­ther re­forms.

“Down­grad­ing the rat­ing level be­fore the elec­tions, how­ever, is hard, given we ex­pect Moody’s to still con­tinue its form of lib­er­ally ap­ply­ing too much ben­e­fit of the doubt around growth-pos­i­tive re­forms to come.

“Yet Moody’s is on track, in the long run, to cut into junk in our view as it is slowly aban­don­ing the long-run view that debt to GDP will fall with growth-boost­ing re­forms. Pen­cilling in such a date re­mains hard and looks most likely af­ter the 2019 MTBPS when a mix­ture of po­lit­i­cal in­fight­ing, lack of re­form and fur­ther bud­get slip­page all come to a head.”

The rand gained at the end of last week on the res­ig­na­tion of Nh­lanhla Nene as fi­nance min­is­ter and the swear­ing in of Tito Mboweni as his re­place­ment and ahead of the ex­pected Moody’s re­lease.

At 3.30pm on Fri­day, the do­mes­tic cur­rency was trad­ing at R14.45 to the dol­lar, stay­ing within a range of R14.42 to R14.65 as ex­pected by an­a­lysts.

Chris Harmse, the chief econ­o­mist of Re­bal­ance Fund Man­agers, said the news of Mboweni’s ap­point­ment as the new min­is­ter of fi­nance brought calm­ness and op­ti­mism among for­eign in­vestors. In re­ac­tion, the rand ex­change rate im­proved strongly dur­ing last week, gain­ing US60C from lev­els of around R15.05 to the dol­lar on the Fri­day be­fore last to R14.45 on Fri­day evening.

LEON LESTRADE

THE much-an­tic­i­pated Na­tal Or­chid So­ci­ety bi-an­nual Or­chid Show took place yes­ter­day at the Parkhill Bowl­ing Club in Dur­ban North. The show ap­pealed to ev­ery­one from avid or­chid fans to those who just en­joy ex­quis­ite flo­ral beauty. On dis­play for judg­ing were a fab­u­lous va­ri­ety of hy­brids and species. At­tend­ing the event was Aneesa Bux from Blythedale. |

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