JOHANNESBURG: South Africa's rand rose to its firmest in three sessions on Thursday after Fitch kept its credit rating unchanged at one notch below investment, while increased pressure on President Jacob Zuma also lifted the currency and bonds.
Stocks ended lower although Barclays Africa rose more than 3 percent after its British parent sold more than third of the lender in an oversubscribed rapid share sale.
At 1500 GMT, the rand traded 1 percent firmer at 12.9550 per dollar, having earlier reached a session best of 12.9400 after Fitch affirmed the country's sub-investment grade rating with a stable outlook.
The smallest of the big three rating firms warned that weak economic growth remained a key risk, along with funding to prop up state firms and in-fighting between competing factions in the ANC ahead of the party's elective conference in December.
Fitch downgraded South Africa to BB+ from BBB- on both foreign and local currency debt in early April after a cabinet reshuffle that saw respected finance minister Pravin Gordhan dismissed.
S&P Global Ratings, which also cut its foreign debt rating to "junk" status in April, is due to announce an update on Friday.
"There's a little more anxiety about S&P's because they have a negative outlook and the local currency rating is still investment grade," said co-head of fixed income at Investec Nazmeera Moola.
Traders said the rand is likely to find forward support in the latest bout of pressure facing Zuma, after leaked documents alleged improper dealings in government contracts by Zuma's business friends.
"Rand and bond markets are already pricing in Zuma leaving office before his term ends in 2019. It's unlike in Brazil, investors here are betting on the strength of South Africa's institutions," said senior economist at Nedbank Isaac Matshego.
Bonds also firmed, with the yield on the benchmark government paper due in 2026 cutting 5.5 basis points to 8.545 percent.
In stocks, the broader All-share index was down 1.35 percent at 52,840 and the benchmark Top-40 index lost 1.4 percent to 46,487.
Barclays PLC cut its stake in regional unit to 15 percent sooner than expected in what some analysts said was sign that there was no shortage of buyers of Barclays Africa stock.
In reaction, shares in the pan-African lender climbed 3.3 percent to 143.56 rand.
"Investors recognise that banks are profitable machines, and are willing to take a longer dated view, perhaps beyond the next five years," said Sasha Naryshkine, a fund manager at Vestact in Johannesburg.
On the downside, MTN Group lost 1.2 percent to 116.25 rand after Turkey's Turkcell said its $4.2 billion claim against the mobile phone would be heard in a South African court.
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