What Happened: Moody's Investors Service has kept South Africa's credit rating at Baa3, one grade above junk status, following the country's May 8 election, Fin24 reported May 16. The agency pointed out, however, that the country's long-term growth prospects remain low and its credit profile will likely continue to erode.
Why It Matters: The decision by Moody's gives South African President Cyril Ramaphosa a reprieve from a downgrade from the third major credit agency, which would have increased the costs of borrowing funds and underscored growing risks for international investors. At the same time, the agency's report underlines the country's long-term economic problems, particularly its low growth rate and increasing debt burden.
Background: Standard & Poor's and Fitch Ratings both downgraded South Africa's credit rating in recent months to subinvestment grade.