Moody's cuts two South Africa banks to A3

Moody's Investors Service said it downgraded to A3 from A2 the foreign-currency long-term issuer ratings of South Africa's two rated development finance institutions, Development Bank of Southern Africa and Industrial Development Corp. of South Africa.

The outlook is stable.

The downgrade was prompted by concerns that the impact of the global financial crisis on South Africa might result in the government having to become more selective in allocating its resources and support to state-owned and government-related institutions, Moody's said.

But the agency also said it believes the South African government will provide support to the two rated government-related financial institutions given their development mandates and their strategic importance in terms of policy implementation, the agency said.

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