Moody's lowers S. Africa's credit rating outlook

2011-11-09 12:14:46

Moody's Investors Service on Wednesday downgraded the outlook on South Africa's 'A3' credit ratings to Negative from Stable, reflecting heightened political risk amid constrained public finances.

The rating agency said growing risk that the political commitment to low budget deficits and the ability to manage current debt targets could be impaired by political strains. Moreover, a weaker than expected economic growth would be insufficient to avoid high unemployment rates from rising further.

The major drivers for the negative outlook also include the continued negative impact on private investment deriving from calls for interventionist actions aimed at "quick fixes" for black economic opportunities.

The agency assesses that coming two years would be especially challenging for South Africa's political system.

Moody's previous rating action on South Africa was on July 16, 2009 when it downgraded the local currency bond rating to 'A3' from 'A2' and upgraded the government's foreign currency bond rating to 'A3' from 'Baa1'.