Moody's credit rating agency on Friday has, for a second time in a row, deferred a pronouncement on the country’s rating without giving any reasons. File Photo: IOL

JOHANNESBURG – Banking stocks yesterday rose on Moody’s Investors Service decision not to update its investment grade rating on the country’s sovereign debt and outlook rising more than 3 percent as the move effectively left the country at investment level with a stable outlook.

The all-share index closed the trading session up 1.15 percent at 57 109.64, with the banking sector doing the heavy lifting.   

The blue-chip Top 40 index also rose 1.5 percent higher at 50 966, while the key bank index closed the session up 3.42 percent to 9 399.  

Africa’s biggest bank by assets, Standard Bank, inched up 4.48 percent to R193.53, followed by the largest capitalised FirstRand at 2.92 percent to R64.80, while Nedbank rose 4.01 percent at R261.32, and Absa 4.54 percent higher at R159.

Capitec strengthened 2.52 percent to R1384. 

The country’s bond yields and the rand also found support from Moody’s decision with the currency leading gains among emerging markets currencies – appreciating more than 2 percent against the US dollar and was bid at R14.1525 by 5pm against R14.48 on Friday.

Andre Botha, a senior dealer at TreasuryONE, said positive sentiment among emerging markets could see the rand gaining further ground. 

“However, we have seen Turkey causing some concern in the emerging markets space and with their elections that happened over the weekend. As we are awaiting some results during the day it could feed into the rand market and headline risks are very much in play,” Botha said.

The rand was one of the worst performing emerging markets currency in March as Eskom struggled to power the economy and markets having priced in a Moody’s negative outlook on South Africa.

National Treasury director-general Dondo Mogajane said government had engaged with Moody's and other rating agencies following February’s budget.

“We have to explain the energy situation to rating agencies,” Mogajane said.

Moody’s decision to defere its sovereign credit rating also saw South African bonds making multi-months high gains.

Yields on rand-denominated debt due December 2026 fell more than five basis points to the lowest since May.