Reuters
Fitch raises SA credit outlook to positive
Ratings agency Fitch raised its outlook on SA’s ’BBB+’ sovereign credit rating to positive from stable today, citing the country’s rapid economic growth and improved prospects.
"The change in outlook reflects South Africa’s improved growth performance and prospects as a result of rapidly rising public and private investment and ongoing micro-reforms in the economy," Veronica Kalema, a director in Fitch’s sovereign team, said in a statement. "In addition, the country has seen a substantial improvement in its already sound public finances and strong external balance sheet," she said. Fitch noted last year’s 5% growth had come despite a 250 basis points increase in interest rates since June 2005 and said potential growth would move higher in the medium term. Last month, ratings agency Moody’s Investors Service revised its outlook on SA’s foreign currency debt ratings to positive from stable to reflect an improvement in the country’s external credit indicators, despite widening current account deficits which weakened the rand currency last year. The rand was last at R6,8288 against the dollar yesterday, compared to about R6,84 just before the Fitch statement came out, but analysts said the impact of the latest upgrade on the currency should be minimal. "It’s obviously a positive affirmation of the developments in the South African economy both on the domestic and external front," said Leon Myburgh, sub-Saharan Africa specialist at Citigroup. "But this announcement is just following what Moody’s has already done and I don’t think it’s of material importance to the rand," he said. Fitch said SA’s public debt ratios were declining fast, while the banking system was sound. On the negative side, it said the country faced worse social problems than rated peers including income inequality, unemployment, crime and AIDS. Standard & Poor’s and Moody’s rate SA ’Baa1’ and ’BBB+’ respectively. Quelle: Reuters