Firms mixed re­ac­tion to Moody’s

Rat­ings down­grades trig­ger dif­fer­ent share move­ments

The Star Early Edition - - COMPANIES - Di­neo Faku

JSE-LISTED com­pa­nies, whose credit rat­ings were down­graded by Moody’s In­vestor Ser­vices on Mon­day, had a mixed show­ing on the bourse yes­ter­day.

The rat­ing ac­tion on Mon­day fol­lowed the weak­en­ing of the South African gov­ern­ment’s credit pro­file, and Moody’s low­er­ing of the South African sov­er­eign rat­ing to Baa3 from Baa2 last Fri­day.

The axe fell on MTN, Sa­sol, Bid­vest, Growth­point Group and also on state owned Transnet and Eskom, although it also af­firmed the credit rat­ings of nine other JSE listed com­pa­nies in­clud­ing An­gloGold Ashanti, the only South African min­ing com­pany on the global Top 40 Min­ing In­dex.

Africa’s largest tele­coms firm by sub­scribers MTN saw its share price lose 2.6 per­cent yes­ter­day to close at R111.40 a share, while petro­chem­i­cals giant Sa­sol lost 0.25 per­cent to close at R364.61 a share. Bid­vest, the trad­ing and dis­tri­bu­tion com­pany, gained 0.42 per­cent to close at R161.15 a share.

Moody’s down­graded MTN to Ba1 from Baa3, and as­signed a sta­ble out­look to the com­pany.

Moody’s said it had as­signed the sta­ble out­look to the com­pany as it ex­pected that MTN would pre­serve its cur­rent mar­ket po­si­tions and cur­rent op­er­at­ing mar­gins and main­tain a strong liq­uid­ity pro­file over the next 12 to 18 months.

It also said that the Ba1 rat­ing po­si­tion ad­e­quately cap­tured the cur­rent chal­lenges faced in its key mar­kets South Africa and Nige­ria and the repa­tri­a­tion con­straints faced by MTN Nige­ria, re­sult­ing in MTN be­ing more re­liant on cash flows out­side its key mar­kets. Moody’s af­firmed multi­na­tional me­dia group Naspers and Stein­hoff rat­ings at Baa3 with a sta­ble out­look. It also af­firmed An­gloGold Ashanti se­nior un­se­cured rat­ings.

“The af­fir­ma­tion of An­gloGold Ashanti’s Baa3 rat­ing is based upon the com­pany’s di­ver­si­fi­ca­tion of gold pro­duc­tion out­side of South Africa, which only rep­re­sents around 17 per­cent of group in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­sa­tion ad­justed for an ap­por­tioned share of cor­po­rate costs”, said Dou­glas Rowl­ings, a Moody’s an­a­lyst.

It af­firmed the credit rat­ings of Bar­loworld, the Fortress In­come Fund, Hyprop In­vest­ments, Telkom, Im­pe­rial Group, and Re­de­fine Prop­er­ties at Baa3 with a neg­a­tive out­look.

In­vestec Bank’s chief econ­o­mist, Annabel Bishop, said that from an eco­nomic per­spec­tive, South Africa’s 2017 (April and June) credit rat­ing down­grades were ex­pected to neg­a­tively af­fect do­mes­tic con­fi­dence mea­sures, with some large cor­po­rate fixed in­vest­ment and con­sumer ex­pen­di­ture de­ci­sions likely be­ing put on hold.

She also said con­cerns over po­lit­i­cal and eco­nomic pol­icy uncer­tainty for the future was neg­a­tively im­pact­ing sen­ti­ment.


Staff of MTN work­ers in Nige­ria. Moody’s down­graded the group, but ex­pected that MTN would pre­serve its cur­rent mar­ket po­si­tions.

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