The African National Congress (ANC) succession debate does not pose a significant threat to the creditworthiness of rand-denominated debt, Business Unity South Africa (Busa) said on Wednesday.
”We do not expect significant shift in the ANC policy, regardless of the outcome of the conference,” Busa CEO Jerry Vilakazi said.
This was in response to United States rating agency Moody’s, which said President Thabo Mbeki’s reported reluctance to relinquish power worried international investors.
Vice-president at Moody’s sovereign risk unit Kristin Lindow said international investors would prefer to see a new ANC head elected at the ruling party’s national conference in Polokwane in December, Business Day reported.
Moody’s revised its outlook on South Africa’s Baa1 mid-investment grade rating for foreign currency debt to ”positive” from ”stable” earlier in the year.
”The idea is that when in any emerging market there is a sign that an existing head of state wants to retain his powers, there tend to be question marks about what that could lead to,” she told Business Day.
However, a rating review was unlikely to happen before the conference, Lindow said.
Busa’s Vilakazi said Moody’s appeared to have limited understanding of South Africa’s political economy.
”Political discipline has been the bedrock of solid macro-economic fundamentals that are in place in South Africa today. These appear not to have been considered in Moody’s assessment of future scenarios,” he said.
Vilakazi said although Busa disagreed with Moody’s assessment, the agency’s statements were most likely representative of some opinions held by global market participants.
He added that Moody’s comments might impact negatively on South Africa’s economy by reducing portfolio inflows in the short to medium term and increasing the cost of raising international debt for all South African borrowers. — Sapa