Moody’s likely to downgrade SA if govt takes on Eskom debt - PwC

Lew Skannen

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#1
Moody’s Investor Services is likely to downgrade South Africa’s sovereign credit rating to below investment grade in 2019 “unless something significant happens”, with tax collection below projections and a possible Eskom bailout on the cards, according to PricewaterhouseCoopers.

The audit and advisory firm told a media briefing on Wednesday that revenue collection in November and December 2018 “became significantly worse” and “chances are quite high” that Moody’s will cut SA’s rating to junk.

Finance Minister Tito Mboweni is expected to detail government’s support for Eskom in his budget speech next Wednesday.

The Department of Public Enterprises, meanwhile, told Parliament on Wednesday that the debt-laden power utility was is “technically insolvent” and will not last beyond April in its current state.
https://www.fin24.com/Budget/budget...e-sa-if-govt-takes-on-eskom-debt-pwc-20190214
 

TelkomUseless

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#2
Haven't moody's been "warning" us for like a few years now?

JUST DO IT!!! Show #ProudlyANC government some consequences for their crap...

CR's investors trip is going to be undone by Eskom. Don't worry SA, keep on voting ANC!
 

Lew Skannen

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Just a few words, use it, don't use it.....

1. Sell off any shares you hold on the JSE
2. Short the Rand
3. Take your investments to offshore portfolios.

and... oh....

4. Get the Vaseline ready...
 

Jola

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Can you think of any reason why SA should NOT be downgraded ?

#ProudlyBroughtByANC
 

Gordon_R

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The other agencies already rate SA as junk, so Moody's is just a confirmation, though it will have consequences. See: https://en.wikipedia.org/wiki/Economy_of_South_Africa

In April 2017, political tensions in the country arose over the sacking of nine cabinet members including Minister of Finance Pravin Gordhan by the president Jacob Zuma. The finance minister was seen as central to efforts to restore confidence in South Africa. As a result of the tensions, S&P Global cut South Africa’s credit rating to junk status on Monday 3 April 2017. Fitch Ratings followed suit on Friday 7 April 2017 and cut the country’s credit status to the sub-investment grade of BBB-.
 

Lew Skannen

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The other agencies already rate SA as junk, so Moody's is just a confirmation, though it will have consequences. See: https://en.wikipedia.org/wiki/Economy_of_South_Africa
South Africa is still included on a few investment indexes abroad, only because of Moodies rating, which is at investment rate. If Moodies shoots the gun, we will be removed from all those indexes and the country will not even be available to any investor abroad.

Another negative effect, as experienced by other countries, our stockmarket will plunge. Investors will dump all their shares in an attempt to make up some losses. Shares will become worthless and the stockexchange, much like that of Zim and Venezuela, will see most companies delisting. Those left will see share prices at all times low and they will trade sideways for many, many years to come. A lot of people will lose a lot of money.

The ANC has been clinging to this rating for a reason. They know the consequences of losing it.
 
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#10
Good.

Government must stop using SOEs to steal money.

Let Eskom crash, and open the power Grid to the public. The investment will be astonishing. There are massive amounts of money to be made in the power sector. Just need skilled entrepreneurs to do it.
 
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yebocan

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#11
Can you think of any reason why SA should NOT be downgraded ?

#ProudlyBroughtByANC
The misery , on top of the misery it will unleash. Those thinking this will sway voters...are in for a surprise. In the absence of a credible opposition, that is able to offer an alternative that the majority can buy into....either the status quo remains, or the radicals from either side, will cash in... I just do not get joy that some derive from this ****fest and what may still be heading our way.
 

ISP cash cow

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South Africa is still included on a few investment indexes abroad, only because of Moodies rating, which is at investment rate. If Moodies shoots the gun, we will be removed from all those indexes and the country will not even be available to any investor abroad.

Another negative effect, as experienced by other countries, our stockmarket will plunge. Investors will dump all their shares in an attempt to make up some losses. Shares will become worthless and the stockexchange, much like that of Zim and Venezuela, will see most companies delisting. Those left will see share prices at all times low and they will trade sideways for many, many years to come. A lot of people will lose a lot of money.

The ANC has been clinging to this rating for a reason. They know the consequences of losing it.
The downgrade from Moody's was inevitable. It wasn't a matter of if but when and there was no way that any of our politicians were going to get us out of the downgrade.

It seems though investors still may invest in South Africa since we are a very liquid emerging market area. so the downgrade might not be the last stand. It is up to the ANC and Ramaphosa now if they are in truth wanting to pull us out of the slum.

I cannot see the government not bailing Eskom out in the short term, as our economy and country cannot have a collapsed electricity supply, but I think with them splitting them into three individual companies it will allow Ramaphosa to open up the generation market to private sectors to supply us with power and so Eskom's generation market in the years to come will either need to sort their house out or be overtaken by the private sector.
 

thestaggy

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#15
The misery , on top of the misery it will unleash. Those thinking this will sway voters...are in for a surprise. In the absence of a credible opposition, that is able to offer an alternative that the majority can buy into....either the status quo remains, or the radicals from either side, will cash in... I just do not get joy that some derive from this ****fest and what may still be heading our way.
It will sway voters, but not in the direction most would hope. The EFF is the type of party that thrives in the conditions SA will find itself should we be downgraded and things head south. They say all the BS desperate people want to hear.
 

Polymathic

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#16
Good.

Government must stop using SOEs to steal money.

Let Eskom crash, and open the power Grid to the public. The investment will be astonishing. There are massive amounts of money to be made in the power sector. Just need skilled entrepreneurs to do it.
You making the false assumption that people will actually pay their power bills and won't destroy the infrastructure if they are cutoff for not paying
 

The_Librarian

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#17
Good.

Government must stop using SOEs to steal money.

Let Eskom crash, and open the power Grid to the public. The investment will be astonishing. There are massive amounts of money to be made in the power sector. Just need skilled entrepreneurs to do it.
Kosie and his R4000 petrol generator? :ROFL::ROFL::ROFL::ROFL:
 

NarrowBandFtw

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#19
Moody's doesn't have the balls, been crying wolf for over a year now.

EVERY time we're up for review they find an excuse to back down. "waiting for the mid-term budget", "waiting for the real budget", "waiting to see what direction the new president gives", "waiting for the election", "SOE this", "SOE that".

Time to **** or get off the pot Moody's.
 

Lew Skannen

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#20
Moody's doesn't have the balls, been crying wolf for over a year now.

EVERY time we're up for review they find an excuse to back down. "waiting for the mid-term budget", "waiting for the real budget", "waiting to see what direction the new president gives", "waiting for the election", "SOE this", "SOE that".

Time to **** or get off the pot Moody's.
I have absolutely no doubt that Moody's are being bribed to give favorable outcomes in their decisions. They have been fined before for not acting appropriately and misleading investors. So, it will all depend on whether the ANC has sufficient money to pay the required bribes to keep them at investment grade with Moody's.

If Moody's were an honest company giving accurate data to investors, they would have followed suit with the two main players who already protected international investors by downgrading SA.
 
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