Moody’s late on Friday affirmed South Africa’s debt at “Baa3”, the lowest rung of investment grade, saying the previous weakening of national institutions was gradually reversing and this was supporting an economic recovery.
While the decision to affirm the rating was widely anticipated by market participants, the unexpected move to revise the outlook lifted sentiment.
At 5pm, the rand bid at R11.6581 to the dollar, 11.23cents firmer than at the same time on Friday.
In fixed income, the yield on the benchmark 2026 paper was down 7.5 basis points to 7.915percent, reflecting the strongest bond prices since early 2015.
“What surprised markets on Friday is that Moody’s upgraded the rating outlook from negative to stable - which means that a downgrade is no longer likely even in the medium-term, unless of course new developments overtake us,” Commerzbank analysts said in a note.
On the bourse, banks bucked the weaker trend on the broader market, rising 0.61percent to 10192.17 points.
The all share index fell 0.41percent to 56176.43 points, while the Top40 index was down 0.38percent to 49566.23 points.
Banks, considered the barometer of both political and economic sentiment, have largely borne the brunt of previous credit ratings downgrades given their substantial exposure to sovereign debt and various state-owned companies.
Construction firm Murray & Roberts was the most notable mover on the equity market, climbing 45.54percent to R14.03 at the close after Germany’s ATON said it planned to make a buyout offer.
“In the scheme of things, that is positive for Murray & Roberts. Like many others in the construction space they have been under pressure because the infrastructure spending in the country has dwindled. It should help them get back on track,” said Ryan Woods, a trader at Independent Securities.
Naspers remained under pressure, down 0.63percent to R3130 following the sale of a 2percent stake in Tencent last week.