JOHANNESBURG/LONDON: Moody’s left South Africa on the brink of “junk” status on Friday after it revised the outlook on the country’s last investment-grade credit rating to “negative,” piling pressure on President Cyril Ramaphosa to quicken the pace of reform.
Moody’s said the outlook revision on its ‘Baa3’ rating, the lowest rung of investment grade, was motivated by a deterioration in the economic growth outlook and rising debt.
Analysts had expected the move after a bleak mid-term budget statement this week that slashed this year’s growth forecast to 0.5 percent and showed government debt racing to more than 70 percent of gross domestic product by 2023.
The rand tumbled more than 2.5 percent over the past week against the dollar, its sharpest weekly drop since early August. Yields on local 10-year government bond issues traded on Monday at just over 8 percent but climbed as high as 8.6 percent following the dire budget predictions.
The negative outlook means there is a window of 12-18 months in which a downgrade could be delivered, but it could come sooner if Moody’s isn’t impressed by the fiscal picture presented at the next budget statement in February.
“The development of a credible fiscal strategy to contain the rise in debt, including in the 2020 budget process and statement, will be crucial to sustain the rating at its current level,” Moody’s said in a statement after South African financial markets had closed.
It added that its new outlook reflected rising concern that the government would not find “the political capital to implement the range of measures it intends, and that its plans will be largely ineffective in lifting growth.”
The finance ministry responded by saying the country had “a narrow window to demonstrate faster and concrete implementation of reforms.”
Ramaphosa has struggled to revive Africa’s most advanced economy since taking over from scandal-plagued Jacob Zuma in February 2018.
The wave of optimism among foreign and local investors that accompanied his rise to power has fizzled out as the economic challenges have grown more acute, with unemployment reaching an 11-year high above 29 percent and state power company Eskom struggling to keep the lights on.
One of the greatest worries is rising government debt, which shows no signs of stabilizing soon amid repeated bailouts for state-owned companies.
Fund managers said they were not expecting a steep sell-off in government bonds and the rand when financial markets re-open on Monday, because the outlook revision was expected by so many and South African assets had fallen sharply over the past week.
The spread of South African dollar debt over US Treasuries is already wider than on some junk-rated sovereigns, reflecting longstanding concerns over the country’s fiscal health.
“Valuations are already reflecting this outcome. So, on any sell-offs, we would see it as a buying opportunity,” said Jean-Charles Sambor, deputy head of emerging market fixed income at BNP Paribas Asset Management.
S&P Global and Fitch already moved South Africa’s debt to sub-investment level in 2017, when the country was embroiled in corruption scandals under Zuma.
A move to “junk status” from all three agencies typically increases a government’s cost of borrowing by raising the premium that investors demand to hold its debt. It could also see South Africa evicted from the benchmark World Government Bond Index of local-currency debt, which could trigger billions of dollars of passive outflows.
Phoenix Kalen, director of emerging markets strategy at Societe Generale, said South Africa was now in the “last-chance saloon” and that it had to stabilize its debt.
“This will be a Herculean task,” Kalen said, citing financial pressures at state companies among causes for concern.
Ramaphosa’s government has promised Eskom 230 billion rand ($15.3 billion) of bailouts over the next decade, on top of a 59 billion rand “special appropriation” over the next two fiscal years. But analysts say it will need more state money than that.
Kevin Lings, chief economist at asset manager Stanlib, said a downgrade in 2020 was now his “base case” and that some investors would be reluctant to buy South African debt until the downgrade had happened.
“Next year is going to be marked by consistent uncertainty around the currency and bond markets, it’s going to put South Africa under a lot of strain,” he said.
Moody’s leaves South Africa teetering on brink of ‘junk’
Moody’s leaves South Africa teetering on brink of ‘junk’
- Moody’s said the outlook revision on its ‘Baa3’ rating, the lowest rung of investment grade, was motivated by a deterioration in the economic growth outlook and rising debt
Spurs thrash Man City 4-0 to end 52-match unbeaten home run
City’s first defeat on home soil from open play since the eve of the 2022 World Cup leaves them still five points adrift of Premier League leaders Liverpool
MANCHESTER: Manchester City crashed to a stunning fifth consecutive defeat as Tottenham won 4-0 at the Etihad to end the English champions’ 52-game unbeaten home run on Saturday.
James Maddison struck twice in seven first-half minutes before Pedro Porro rubbed salt in the wounds of his former club and Brennan Johnson completed the rout.
City’s first defeat on home soil from open play since the eve of the 2022 World Cup leaves them still five points adrift of Premier League leaders Liverpool, who play their game in hand at bottom-of-the-table Southampton on Sunday.
A great day for Tottenham eases the pressure on Ange Postecoglou as they climb into the top six.
City boss Pep Guardiola has committed himself to turning around the poorest run of his managerial career after extending his contract till 2027 this week.
But hopes his new deal could revitalize a City side, that have won an unprecedented four consecutive Premier League titles, proved short-lived.
Rodri paraded his Ballon d’Or trophy to the home fans before kick-off as his name was lit up across the Etihad pitch by firelight in an ostentatious show of support for the Spanish midfielder.
The 28-year-old is not expected to play again this season after suffering knee ligament damage in September and his absence has been at the heart of City’s demise.
Guardiola’s men did start strongly as Guglielmo Vicario denied Erling Haaland and the Norwegian had another shot deflected wide.
But the momentum of the match completely swung on Tottenham’s first serious attack after 13 minutes.
Dejan Kulusevski’s teasing cross picked out Maddison who applied a cool first-time finish.
Maddison had found himself frozen out of Postecoglou’s starting line-up in recent weeks and was keen to prove a point to his manager.
Son Heung-min’s inventive pass freed the England international inside the box and he dinked the ball over the advancing Ederson to double Spurs’ lead.
Inconsistency has been the scourge of Tottenham’s season so far.
A 2-1 home defeat to Ipswich before the international break saw Postecoglou’s men slip to 10th in the table.
But they have now twice won comprehensively in Manchester after a 3-0 win over United at Old Trafford.
Dominic Solanke was denied by a fine Ederson save with the chance to make it 3-0 before half-time.
Spurs, though, were not to be denied seven minutes into the second period.
The excellent Kulusevski crossed for Solanke and he patiently laid the ball back for Porro to blast home from close range.
Haaland clipped the bar from an almost impossible angle as City labored to find a response.
Instead, they were hit with one final sucker punch as Timo Werner eased past Kyle Walker and crossed for Johnson to tap home at the far post.
The one glimmer of hope for City may be the return of Kevin De Bruyne after a two-month injury absence as a late substitute.
However, Guardiola has to find solutions fast if his side’s title defense is to be maintained into the new year.
A daunting trip to face Liverpool at Anfield is next up in the Premier League, where City have not won in front of a crowd since 2003.
What We Are Reading Today: ‘The Organic Line’
- Once recognized, however, the line has seismic repercussions for rethinking foundational concepts such as mark, limit, surface, and edge
Author: IRENE SMALL
What would it mean to treat an interval of space as a line, thus drawing an empty void into a constellation of art and meaning-laden things? In this book, Irene Small elucidates the signal discovery of the Brazilian artist Lygia Clark in 1954: a fissure of space between material elements that Clark called “the organic line.”
For much of the history of art, Clark’s discovery, much like the organic line, has escaped legibility. Once recognized, however, the line has seismic repercussions for rethinking foundational concepts such as mark, limit, surface, and edge.
Odegaard inspires Arsenal to reignite title hopes
- Victory at the Emirates lifts them to 22 points, level with third-placed Chelsea
- Captain Odegaard was making his first appearance at the Emirates since late August and showed what a huge miss he was for Arsenal
LONDON: Mikel Arteta said his Arsenal team “flows in a different way” when Martin Odegaard is playing after the Gunners crushed Nottingham Forest 3-0 on Saturday to end their winless run.
Stunning strikes from Bukayo Saka and Thomas Partey and a first Premier League goal for teenager Ethan Nwaneri gave Arsenal a first victory in five league games, reigniting their title challenge.
Arsenal, Premier League runners-up for the past two seasons, started the campaign strongly but their form dipped and they kicked off on Saturday nine points behind leaders Liverpool.
Victory at the Emirates lifts them to 22 points, level with third-placed Chelsea.
Arsenal took the lead in the 15th minute when Saka exchanged passes with Odegaard on the edge of the area before lashing a left-footed shot into the roof of the net.
Captain Odegaard was making his first appearance at the Emirates since late August and showed what a huge miss he was for Arsenal during his two-month injury absence.
Time and again the Norwegian found space in the penalty area with his quick feet and he teed up Gabriel Jesus, who curled narrowly wide, before linking up with Saka again.
Partey doubled Arsenal’s lead early in the second half after collecting Saka’s pass 20 yards out and taking a touch, before curling his shot away from the dive of Matz Sels and inside the far post.
Seventeen-year-old Nwaneri tucked away Raheem Sterling’s cutback to wrap up an emphatic win in the 86th minute.
“I think we started really well,” Arteta told the BBC. “The sense I was getting in the last 48 hours after the international break, the boys coming together and were all at it.”
Speaking about Odegaard, who returned to action at Inter Milan earlier this month, he said: “It’s not a coincidence. The team flows in a different way when he is playing.”
And he also had warm words for Nwaneri.
“He is the second-youngest (Premier League goalscorer) in our history,” Arteta said. “That’s a story in itself.
“He’s brave. You see the reaction of fans and they were singing ‘He’s one of our own’. I think we have to put brick by brick and make sure the cement doesn’t get dry. Hopefully we can build a beautiful thing with him.”
Embracing the skies: Riyadh aviation show inspires next generation of pilots
- Saudi Hot Air Balloon Federation’s first female pilot wants more women to sign up
RIYADH: The Saudi Hot Air Balloon Federation was among the top organizations at an aviation show that captivated the Kingdom’s capital with stunning aerobatic displays and an impressive lineup of aircraft.
Sand and Fun 2024, which concluded on Saturday at Thumamah Airport, showcased the Kingdom’s wide-ranging aviation sector.
The federation presented a collection of colorful hot air balloons to demonstrate the experience to adults and younger generations as part of the efforts to raise awareness about hot air ballooning and to inspire a new generation of pilots.
Among the pilots was Afrah Al-Harbi, the first female Saudi hot air balloon pilot to graduate from the federation.
Al-Harbi is on a mission to cultivate a community of female pilots, encouraging women to explore the exhilarating world of hot air ballooning. Her story is an inspiring testament to the opportunities available to women in aviation and the importance of representation in this field.
“At the beginning, I was studying at the university, but the Saudi Hot Air Balloon Federation launched a training program to train balloon pilots,” she told Arab News. “Thank God, I registered, and I was accepted. After that, I started my studies to become a balloon captain. The federation covered the entire mission, which is considered a grant from the federation. I obtained the European EASA license, and then I also obtained the Saudi license from the General Authority of Civil Aviation.”
The federation offers structured programs to equip aspiring pilots with both theoretical knowledge and practical skills.
Hot air balloons first appeared in the Kingdom in AlUla as part of the Winter at Tantora Festival in 2018. This event not only showcased the beauty of ballooning, but also laid the groundwork for the establishment of the federation.
The hot air balloon sport is known and famous worldwide. We need a type of it that people can take part in within the Kingdom, especially for global competitions.
Abdulrahman Al-Wahaibi, Saudi hot air balloon pilot
The organization plays a crucial role in promoting balloon culture and raising awareness of the sport.
“We want to show people that hot air ballooning is not only fun, but also safe,” Al-Harbi said, emphasizing the importance of public perception in the growth of the sport.
Her career has included a visit to the Netherlands, where she underwent extensive training.
“My studies in the Netherlands were quite lengthy, but it was an incredibly enriching experience,” she said. “The training included both theoretical subjects and practical sessions to help us obtain our licenses.”
The rigorous training not only prepared Al-Harbi for the technical aspects of flying, but also instilled a deep appreciation of the art of ballooning.
Abdulrahman Al-Wahaibi also spoke about his journey in the world of hot air ballooning, which began was he was a student in Australia.
“I looked at a balloon for the first time in my life and was fascinated by its shape,” he told Arab News. “I had to try the experience, so I did, as a passenger. The experience was beautiful, and I thought we needed this in Saudi Arabia. At that time, Saudi Arabia did not have hot air balloons.”
Al-Wahaibi dedicated himself to bringing the ballooning experience back to Saudi Arabia, sharing it with family, friends, and the community.
This included studying aerospace engineering and breaking records in Australia for the fastest training period. He expressed pride in being part of the first Arab country to take part in international hot air balloon competitions, highlighting the significant strides made by the Saudi Hot Air Balloon Federation.
“The hot air balloon sport is known and famous worldwide,” Al-Wahaibi said. “We need a type of it that people can take part in within the Kingdom, especially for global competitions.”
His vision aligns with the federation’s mission to broaden participation and elevate the sport on an international level.
Based in AlUla, the Saudi Hot Air Balloon Federation plans festivals designed to integrate the natural environment and the grandeur of the historic landmarks of ancient civilizations such as Hegra.
The five-day event at Thumamah Airport gave visitors the opportunity to meet pilots, learn about the intricacies of ballooning, and even experience the thrill of a balloon ride.
With inspiring pilots such as Al-Harbi and Al-Wahaibi at the helm, the outlook for hot air ballooning in the years to come looks as bright as the skies adorned with colorful balloons.
Where We Are Going Today: Crosto bakery in Dammam
- The Crosto Om Ali provided a warm, creamy, comforting conclusion to the meal
If you’re in Dammam and looking for a flavorful brunch or a light meal, the recently opened bakery Crosto offers a cozy atmosphere and a versatile menu catering to different tastes.
The maple shrimp for SR46 ($12) was the highlight of our visit — perfectly cooked shrimp complemented by a sweet maple glaze. The chicken sliders (SR33) were another favorite — juicy, tasty, and served on fresh buns. The Turkish shakshuka and Crosto avocado are worth trying too.
The Crosto Om Ali provided a warm, creamy, comforting conclusion to the meal.
Crosto’s Turkish Coffee is a must-have for coffee enthusiasts. Its authentic preparation and rich taste paired perfectly with the desserts, enhancing the overall dining experience.
The atmosphere at Crosto is welcoming and casual. However, the service during our visit was a little slow, which might be a concern if you’re in a rush.
With its mix of regional and international flavors, Crosto could be a good choice for your next outing in Dammam.
For more information, check their Instagram @crosto.sa.
