Moody's on May 6 confirmed South Africa's Baa2 long-termgovernment bond and issuer ratings with a negative outlook, concluding a reviewfor downgrade that commenced March 8.
Moody's did not change the country's local- orforeign-currency country ceilings, which remain at A1 for local-currency debtand deposits, A2/P-1 for foreign-currency debt and Baa2/P-2 forforeign-currency bank deposits.
Moody's said South Africa appears to be approaching aturning point following several years of declining growth. The agency expectsthe country's 2016-2017 budget and medium-term fiscal plan to stabilize andeventually reduce the general government debt metrics and said recent politicaldevelopments, while disruptive, testify to the underlying strength of SouthAfrica's institutions.
The negative outlook reflects downside risks to the growth,fiscal and political outlook, as well as the potential for renewed globalfinancial market volatility to increase external imbalances and impede growth.