Moody’s cuts three South African GRIs

Moody's Investors Service said it downgraded the long-term foreign-currency issuer ratings of the Development Bank of Southern Africa (DBSA), the Industrial Development Corp. of South Africa (IDC) and the long term local-and foreign-currency issuer ratings of the Land and Agricultural Development Bank of South Africa (Land Bank) to Baa3 from Baa2.

Land Bank's local- and foreign-currency and DBSA's foreign-currency short-term issuer ratings were also downgraded to Prime-3 from Prime-2.

The outlook on all long-term global scale ratings is negative.

At the same time, the agency affirmed the Aa1.za/P-1.za national-scale issuer ratings (NSRs) assigned to DBSA and Land Bank.

Moody’s said the actions on these three government-related issuers (GRIs) follow the weakening of the South African government's credit profile, as captured by the similar rating action on the sovereign rating on June 9.

The action reflects the weakening capacity of the South African government to support these institutions in case of need, as captured by the recent downgrade of South Africa's government bond rating to Baa3 from Baa2, the agency explained.

The issuer ratings of all three entities continue to benefit from a rating uplift from their stand-alone credit profiles, owing to their full government ownership, the developmental and policy role that they play in the market and the government's past record in providing support and injecting fresh capital to these GRIs.

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