Moody’s upgrade acknowledgment for SA: Economist
The upgrade of South Africa’s country ceilings for foreign currency debt and bank deposits to Baa1 from Baa2 by international agency Moody’s Investors Service was a resounding acknowledgment that South Africa has got its policy mix right, says Colen Garrow, an economist at Brait.
Speaking to I-Net Bridge on Tuesday morning, Garrow said: “This is recognition and acknowledgement that South Africa’s economic, fiscal and monetary mix of policies is moving in the right direction.”
Moody’s said in a statement released on Monday night that the upgrade principally reflected the substantial strengthening of South Africa’s foreign reserves position. The outlook is stable.
Garrow said one significant spin-off from the news was that the spread on the Reserve Bank’s syndicated loan, which was raised in July last year, could be renegotiated, taking the pressure off the country’s finances.
He added that the highlight was that South Africa would now be a more attractive destination for foreign direct investment (FDI), putting it alongside countries such as Malaysia. The country now also only needs to move one notch up to be on the same level as countries such as China.
Garrow added that it also means that the major international asset managers that run the large capital market funds will be able to assign a greater weighting in the debt markets to South Africa. – I-Net Bridge