Credit ratings agency Moody’s has warned that it could cut the investment grades of Eskom‚ the South African National Roads Agency (Sanral)‚ the Industrial Development Corporation (IDC)‚ the Development Bank of Southern Africa (DBSA) and the Land Bank imminently‚ after it placed them on immediate review for a downgrade on Wednesday.
BDlive reported that the sudden and dramatic action by Moody’s indicates significantly heightened investor concerns over state-owned companies‚ several of which have been tainted by governance and corruption concerns over the past few months.
Moody’s primary concern is to assess whether the companies will continue to have access to the debt market in the future and whether they will be able to absorb higher funding costs.
It follows the decision by specialist asset manager Futuregrowth two weeks ago to pull the plug on new loans to the five entities‚ citing governance concerns. Transnet‚ the sixth entity over which Futuregrowth raised concerns‚ is not affected and has not been placed on review.
Read the full story at: Moody’s to review state entities
– TMG Digital/BDlive