Industrials among Moody’s casualties

LARGE industrial stocks were among a slew of South African companies hit by Moody’s credit rating downgrades in midweek, including banks, miners and telecoms counter MTN.

The ratings agency also downgraded municipalities and state-owned companies as a result of “constraints” in the economy brought about by SA’s recent sovereign downgrades.

Mark Hodgson, an analyst at Avior Capital Markets, said there were contrasting global rating actions in respect of Bidvest and Barloworld. The former was downgraded with a negative outlook, while Barloworld was upgraded with a stable outlook.

“With Bidvest potentially looking to internationalise its services and commercial product divisions this may have implications for the cost of offshore debt,” Hodgson said.

Moody’s said Wednesday’s rating actions followed the weakening of the South African government’s credit profile. Downgrades included Transnet, Eskom, Ekurhuleni metro, Imperial Group and Redefine Properties. But Moody’s affirmed the long-term issuer rating and maintained the stable outlook for Naspers.

Bidvest Group said on Wednesday that following Moody’s negative rating of SA, the agency had lowered the group’s global long and short-term counter-party credit ratings. The outlook remained negative. However, Bidvest’s national scale rating had remained unchanged, it said.

Meanwhile, the ratings agency affirmed Barloworld’s long-term and short-term global issuer ratings, and raised the company’s long-term national issuer ratings.

But it said the outlook on Barloworld had changed from stable to negative as a result of the change of outlook on SA’s sovereign rating.

Moody’s said it recognised Barlowo “leading competitive market positions, supported by strong brand offerings and stable long-term relationships with its principal suppliers”.

“The ratings also considered Barl good liquidity position resulting from its favourable debt maturity profile,” Moody’s said. — TMG