The credit rating outlook of South Africa was slashed Wednesday due to increased political risk and public finances pressured by demands for spending, according to published reports.
Bloomberg reports Moody's Investors Service pulled down the rating outlook from stable to negative, which is the service's fourth lowest level for investment. The nation hosting the African continent's largest economy said it is disappointed and does not agree with the downgrade.
The service was prompted by "the growing risk that the political commitment to low budget deficits and the ability to keep within current debt targets could be undermined by popular pressures and rising internal strains within the African National Congress" and labor unions that are allied with it, according to Moody's as cited by Bloomberg.
The National Treasury of South Africa attributed the reduction to the poor state of the global economy. South Africa also is aiming to bounce back and enhance growth in the nation's public revenue.
The Wall Street Journal attributes the downgrade to a logjam in the nation's administration as to how best to stimulate growth and minimize jobless rates.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.