Moody’s Gives Up South African Ratings Licence

International credit rating agency Moody’s has given up the regulatory licence of its South African subsidiary, as it shifts towards servicing cross-border investors and African issuers seeking access to international capital markets.

The decision, disclosed in a regulatory notice, is a recalibration of the agency’s operating model in Africa, even as it maintains that its ability to rate South African entities and the country’s sovereign credit profile remains unaffected.

According to a notice issued by the Financial Sector Conduct Authority (FSCA) on April 16, Moody’s South African unit formally notified the regulator of its intention to relinquish its registration as a credit rating agency under local laws.

“Moody’s Ratings-SA informed the Authority that it no longer wants to be registered as a credit rating agency… and that it is renouncing its registration,” the FSCA said.

Despite the development, Moody’s indicated it would continue to provide ratings on South African issuers from its global network, ensuring continuity for investors and market participants.

However, the exit has regulatory implications for South Africa’s banking sector. Local lenders rely on ratings from recognised agencies such as Moody’s to determine minimum regulatory capital and provisioning for credit risk exposures.

In response, the Prudential Authority, which supervises banks, sought transitional relief to cushion the impact on financial institutions. The FSCA confirmed that it had approved a 24-month extension, allowing banks to continue using ratings issued by Moody’s South African unit for regulatory purposes within the transition period.

In a separate communication dated April 21, the Prudential Authority said it plans to derecognise Moody’s Ratings-SA as an eligible external credit assessment institution, effectively phasing out its role in the domestic regulatory framework.

Reacting to the development, a spokesperson for Moody’s said the agency would maintain a relationship management presence in Johannesburg to support clients, in line with its operating model across Asia and Latin America.

The spokesperson added that the firm remains optimistic about Africa’s long-term growth prospects, pointing to its acquisition of the Global Credit Rating Company as evidence of its commitment to the continent’s domestic debt markets.