South Africa dodges new junk rating

South Africa, whose debt is rated as "junk" or non-investment grade by credit rating agencies Fitch and S&P, has escaped a third junk rating from Moody's which suggested the country's economic outlook was set to improve under its new President Cyril Ramaphosa.

Moody's said in a statement that it was holding the rating on South Africa's long-term debt at Baa3, the lowest investment grade above junk status.

But the statement, released overnight on Friday, said that the ratings agency had decided to upgrade the outlook for the country's debt from "negative" to "stable", meaning that a further downgrade was not on the cards.

"The confirmation of South Africa's ratings reflects Moody's view that the previous weakening of South Africa's institutions will gradually reverse under a more transparent and predictable policy framework," the statement said.

"The recovery of the country's institutions will, if sustained, gradually support a corresponding recovery in its economy, along with a stabilisation of fiscal strength."

Ramaphosa took over as leader of the ruling African National Congress in December and became president last month.

During the nine-year tenure of his predecessor Jacob Zuma, South Africa grappled with weak growth, ballooning national debt, depressed investor confidence and record unemployment.