Moody’s Investors Service, has placed all global scale ratings assigned to eight South African corporates under review for downgrade.
The decision was made after the weakening of the South African government’s credit profile, as captured by Moody’s decision to place the sovereign ratings under review for downgrade on 24 November 2017, the agency said in a statement on Wednesday
Moody’s placed the global scale ratings under review from negative of:
- Barloworld Limited
- Fortress REIT Limited
- Hyprop Investments Limited
- Imperial Group Ltd
- Redefine Properties Limited
- Telkom SA SOC Limited
- The Bidvest Group Limited
- Transnet SOC Ltd.
In addition, Moody’s said it has taken no action on the following corporate issuers:
- AngloGold Ashanti Limited
- AngloGold Ashanti Holdings plc
- Gold Fields Limited
- Gold Fields Orogen Holding (BVI) Limited
- Naspers Limited
- Myriad International Holdings B.V.
- MTN Group Limited
- MTN (Mauritius) Investments Limited
- Steinhoff International Holdings N.V.
- Steinhoff Investment Holdings Limited
- Steinhoff Europe AG
“Ratings at these entities carry some potential exposure to South Africa risk because of their legal domicile,” said Moody’s.
“However AngloGold Ashanti Limited, Gold Fields Limited, Naspers Limited and Steinhoff International Holdings N.V. have significant diversification outside South Africa so have the potential to be rated at least one notch above the South African sovereign. We see MTN Group Limited as having less potential to be rated higher than South Africa, but it was downgraded on 13 June 2017 so its rating is currently positioned below South Africa.”
In addressing why Telkom was placed under review, Moody’s said that the company’s 100% operational concentration in South Africa and 39.3% government ownership, exposed it to the heightened risks associated with the operating environment in South Africa.
“Telkom’s credit profile continues to balance execution risk around its transformation process of its business model and the low leverage and overall strong credit metrics for the rating category,” said Moody’s.
“This offsets to some degree Telkom’s operating and competitive challenges in South Africa, as well as the larger capital investments required to deliver on its key strategies for the upcoming years.”