SA’S plot to take advantage of change

LONDON: South Africa plans to use optimism generated by political changes in the country to tap international bond markets for up to $3 billion (R35bn) shortly, its Treasury disclosed this week.

Tshepiso Moahloli, chief director of liability management at the Treasury, told reporters it could potentially issue in currencies other than dollars and in segments rather than $3bn all at once.

“We do take the opportunity when the market is conducive and currently the market is conducive,” Moahloli said.

She was speaking in London alongside new Finance Minister Nhlanhla Nene.

South Africa’s final investment grade credit rating, by Moody’s, is hanging by a single notch, with the agency due to publish later this month the results of a review for a possible downgrade.

Nene said he believed South Africa was telling a “credible” economic story.

But he acknowledged that it was unclear if Moody’s would cut the rating to “junk” and that the agency and private investors were asking many questions about a government plan to transfer land from white to black owners.

President Cyril Ramaphosa is enjoying something of a honeymoon period with markets and investors after succeeding

Jacob Zuma, whose scandal-tainted administration oversaw an economic downturn.

Nene was reappointed to his former position by Ramaphosa two years after being sacked from the same position by Zuma.

But Ramaphosa’s plan to change the constitution to allow white-owned property to be taken without payment for redistribution to landless black people is raising concerns, though he told Moody’s it would be implemented so as not to harm the economy or food security.

Nene said he too met senior Moody’s analysts on Monday in London and went through plans to cut spending and increase revenues.

“We are looking at what needs to be done to stimulate growth, among other things building confidence and credibility.

“It is very difficult to read the body language of rating agencies, but I think it is a credible story we are telling,” Nene said.

A downgrade would have a negative effect, he said, adding that questions on the land reforms “came from almost all the conversations we had” with Moody’s and investors.

“I don’t think the government should wait for the outcome of the constitutional review committee’s report,” he said.

– Reuters