The decision to initiate a review for downgrade was prompted by the abrupt change in leadership of key government institutions. That action has raised questions regarding:

- progress on reforms previously identified as essential to sustain South Africa's fiscal and economic strength, and the effectiveness of South Africa's policymaking institutions; and

- the more immediate implications for growth and public debt given the potentially negative impact on fragile domestic and external investor confidence.

The review will allow Moody's to assess these risks and if the changes in leadership signal a weakening in the country's institutional, economic and fiscal strength.

South Africa's (P)Baa2 Senior Unsecured Shelf and MTN program ratings were also placed under review for downgrade, as was the (P)P-2 Senior Unsecured Short-Term rating.

In a related rating action, Moody's has also placed on review for downgrade the Baa2 senior unsecured rating of the ZAR Sovereign Capital Fund Propriety Limited, which is fully and unconditionally guaranteed by the Republic of South Africa