South Africa no-confidence
vote outcome means status quo for rating: S&P Global
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[August 09, 2017]
By Marc Jones
LONDON (Reuters) - South African President
Jacob Zuma's survival in a parliamentary no-confidence vote will not
impact the country's downgrade-threatened credit rating, the S&P Global
agency said on Wednesday.
Zuma survived a no-confidence motion against him in on Tuesday by
winning 198 votes to the opposition's 177 votes as African National
Congress lawmakers rallied to his support, though some members did vote
"Failure of no-confidence vote means status quo remains," S&P's primary
analyst for South Africa Gardner Rusike told Reuters.
"The situation remains within our base-case scenario which is desirable
(for maintaining the current BB+ rating with a negative outlook)."
Rusike said, however, that political risks remain elevated, carrying
risks for the South African economy.
The sizable number of ANC parliament members voting with the opposition,
was "unexpected" and showed divisions within the party, Rusike said.
That could impact the December 2017 ANC elective conference and perhaps
even national elections in 2019.
Rusike also said a proposed near $1 billion bailout of South Africa's
national airline, South Africa Airways [SAA.UL], was unlikely to cause a
further rating downgrade.
"This bailout (South African Airways) is taken into account at the level
of moderate contingent liabilities," he said.
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Voting stations are set up during the motion of no confidence
against South African president Jacob Zuma in parliament in Cape
Town, South Africa, August 8, 2017. REUTERS/Mark Wessels/Pool
A key issue, especially for South Africa's local currency debt rating, is the
recent talk about nationalizing the country's respected central bank.
Local South African debt still carries an investment grade rank and loss of this
could see more than $10 billion flee the country's rand-denominated debt markets
"We do believe that South Africa has a deep domestic debt market and we also
believe the central bank is independent and has credibility to implement
monetary policy - as well the government's fiscal flexibility."
"If either of these factors were to weaken, that is what could potentially
result in equalizing the foreign currency rating and the local currency rating,"
"We do believe that it may not be implemented either in the near term or the
(Reporting by Marc Jones; editing by Sujata Rao)
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