SA able to service debt
ALTHOUGH very volatile, SA’S currency has “very little effect” on the country’s ability to service its debt, which is a positive for the country, Kristin Lindow, senior vice-president of sovereign risk at Moody’s Investors Service says.
Earlier, the rand was bid at R8.37 to the dollar from Tuesday’s R8.32. The local unit has been tracking the euro weaker particularly this week amid growing prospects of a Greek exit from the eurozone.
Moody’s hosted a sub-saharan Africa risk conference yesterday.
The ratings agency in November 2011 placed a negative outlook on SA.
Lindow, however, said compared to its Brics (Brazil, Russia, India, China, SA) peers, SA’S A3/neg rating was the second highest rating behind China.
“One has to look at this starting point,” Lindow said.
The rating incorporated both credit strengths and credit challenges.
Credit strengths were identified as SA’S external liquidity; a robust, well-regulated banking system; moderate and predominantly domestic currency-denominated public debt, while the challenges were highlighted as high levels of public spending; high unemployment; and inadequate growth potential. — I-net Bridge
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