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Moody's places South Africa's ratings on review for downgrade

Moody's placed South Africa's Baa2 long-term issuer and senior unsecured sovereign bond ratings on review for downgrade on April 3, prompted by the "abrupt change in leadership" of key government institutions in the country.

The rating agency said the March 30 cabinet reshuffle, in which Finance Minister Pravin Gordhan was fired, has raised questions regarding the government's progress on reforms, which are deemed vital to sustain the country's fiscal and economic strength. It also raises concerns about the potentially negative impact on fragile domestic and external investor confidence, as well as the more immediate implications for growth and public debt.

Moody's said it will assess these risks and evaluate whether the changes in leadership indicate a weakening in the country's institutional, economic and fiscal strength.

The country's (P)Baa2 senior unsecured shelf and MTN program ratings were also placed under review for downgrade, as was the (P)P-2 senior unsecured short-term rating.

South Africa's long-term foreign-currency bond and bank deposits country ceilings remain unchanged at A2 and Baa2, respectively, as well as its A1 long-term local-currency bond and bank deposit country ceiling. Its short-term foreign-currency bonds and bank deposits country ceilings also remain unchanged at Prime-1 (P-1) and Prime-2 (P-2), respectively.

Earlier on April 3, S&P Global Ratings downgraded South Africa's long- and short-term foreign-currency sovereign credit rating to junk status, saying the leadership changes have undermined the country's fiscal and growth outcomes.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.