Investors are betting South Africa will escape a fourth credit-rating downgrade in less than a year.
This is according to new data from Bloomberg, which found that the cost of insuring the country’s sovereign debt against default for five years, fell to a five-year low on Monday.
Moody’s Investors Service is reviewing the nation’s assessment later this month after cutting the debt one level in June, following downgrades by S&P Global ratings and Fitch Ratings in April last year.
On Sunday (11 March) it was reported that newly-appointed finance minister Nhlanhla Nene, may have had a hand in stopping the downgrade after he used his political influence to force the ANC to drop a scheduled motion on the nationalisation of the South African Reserve Bank at the final hour.
Nene is said to have told the party’s political strategy committee on Tuesday morning that the debate must not go ahead because it might unsettle the markets at a time when Moody’s ratings agency was in the country, and lead to another downgrade.
“Nhlanhla told us the timing was not good because Moody’s is in the country,” said an MP who attended the meeting.
“He also advised that caucus should first conduct an assessment of the best international practices on the ownership of central banks so that the motion is better informed, to avoid sending a wrong message to the money market,” the MP added.