Moody's Downgrades South Africa's Ratings

(RTTNews) - Moody's Investors Service on Friday downgraded the sovereign ratings of South Africa to the lowest investment grade, citing the recent political developments.

The agency lowered the ratings to 'Baa3' with 'negative' outlook.

Moody's said recent political developments suggest a weakening of the country's institutional strength which casts doubt over the strength and sustainability of the recovery in growth and the stabilization of the debt-to-GDP ratio over the near-term. The agency added the reduced growth prospects indicate policy uncertainty and slower progress with structural reforms. Moreover, the downgrade reflects the continued erosion of fiscal strength due to rising public debt and contingent liabilities.

The negative outlook reflects Moody's view that the risks to growth and fiscal strength arising from the political outlook are tilted to the downside.

S&P had earlier downgraded South Africa's rating to junk. Fitch had assigned 'BB+' rating with 'stable' outlook.