Moody’s Reprieve Buys South Africa Time to Repair Its Finances

Cities across South Africa are due to host parades for the country’s rugby team in coming days, following last weekend’s emphatic victory in the World Cup final in Japan. In financial markets, too, there were scenes of celebration on Monday after Moody’s elected not to downgrade the country’s debt to junk, the Financial Times reported. Late on Friday the US credit rating agency decided to keep the sovereign debt in investment-grade territory — meaning it is eligible to be bought by most institutional investors — even after a budget update from Cape Town showed continuing struggles with ballooning debt and a widening fiscal deficit. On Monday the rand gained about 1.6 per cent against the US dollar, easily the biggest rise among major currencies, while the price of protecting the country’s debt against default fell by the most since June. Yet the verdict from Moody’s is hardly a vote of confidence in Africa’s second-biggest economy. Read more