JOHANNESBURG (AP) — Moody's is downgrading South Africa's bond rating to a negative Baa1 from A3 citing concerns for political stability amid labor unrest and socio-economic stresses.
Moody's said an important factor is its decision Thursday to downgrade the country's institutional strength from high to moderate, reflecting a diminished capacity to handle political and economic problems.
Analyst Peter Attard Montalto of NOMURA International in London said the downgrade comes much earlier than expected. He predicted further downgrades from other agencies as strikes spread to other mines and other sectors.
Moody's cited uncertainty about policy decisions ahead of a December ruling party congress that will decide if President Jacob Zuma gets a second term to preside over Africa's largest economy.
It said recent strikes highlighted high unemployment and wide disparity between rich and poor.