REPUBLIC OF SOUTH AFRICA - Rating Action

Rating Action

National Treasury
Department:
National Treasury
REPUBLIC OF SOUTH AFRICA
Private Bag X115, Pretoria, 0001. Tel: (+27 12) 315 5944. Fax: (+27 12) 407 9055


SENS ANNOUNCEMENT

RATING ACTION



On 3 April 2017, S&P Global Ratings (S&P) downgraded South Africa’s foreign currency rating to
non-investment grade from ‘BBB-’ to ‘BB+’. The local currency rating was also downgraded from
‘BBB’ to ‘BBB-’, the local currency rating remains at investment grade level. The negative outlook
has been maintained. The rating announcement affects all bonds issued by the National
Treasury. According to the rating agency, the downgrade reflects its view that:

       *   The divisions in the African National Congress(ANC)-led government that have led to
           changes in the executive leadership, including the finance minister, have put policy
           continuity at risk;
       *   This has increased the likelihood that economic growth and fiscal outcomes could
           suffer;
       *   The contingent liabilities of the state, particularly in the energy sector, are on the rise,
           and previous plans to improve the underlying financial position of Eskom may not be
           implemented in a comprehensive and timely manner; and
       *   Higher risks of budgetary slippage will also put upward pressure on South Africa's
           cost of capital, further dampening already-modest growth.

Government notes the sovereign rating announcement by S&P. While S&P has lowered its rating
of foreign currency-denominated debt to a sub-investment grade, rand-denominated debt – which
constitutes 90 per cent of the debt portfolio – retains its investment-grade rating.

While the leadership of the finance portfolio has changed, government’s overall policy orientation
remains the same. Government remains committed to making sure that its work with business,
labour and the civil society continues in order to improve the business confidence and implement
structural reforms to accelerate inclusive economic growth.




For further enquiries contact:


L Madiba
Director: Country Risk Management
012 315 6514

Date: 04/04/2017 02:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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