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'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.