Shares in MTN climbed as much as 6.2% after Moody’s affirmed the mobile phone group’s rating.
In a statement on Monday, MTN informed investors that despite its sovereign rating downgrade of South Africa, Moody’s has left its rating unchanged and affirmed its Ba1 rating.
Moody’s has also revised MTN’s national scale CFR higher to Aa2.za from Aa3.za to reflect the updated mapping of Global Scale Ratings to NSR due to the downgrade of the sovereign rating.
The company added that Moody’s has also left the negative outlook unchanged to reflect the exposure to weakening sovereign credit quality in some of MTN’s key markets such as South Africa (Ba1 negative) and Nigeria (B2 negative).
“Moody’s decision to affirm MTN’s rating resulted from Moody’s view that the company’s healthy credit metrics and good liquidity will help to absorb the deterioration in the domestic macroeconomic environment,” the company said.
By 11:35am, MTN shares were trading 5.74% higher at R49.6, pushing its market value to more than R89 billion.
The company’s shares have gained more than 20% in the past seven days.
Telkom credit rating cut to junk
However, Moody’s had cut Telkom’s credit rating to “junk”, or “speculative grade”, and affirmed a negative outlook.
The rating action follows Moody’s recent decision to downgrade the South African sovereign rating. Telkom’s rating is linked to sovereign rating due to government’s 40.5% stake in Telkom and its operational concentration in South Africa.
Moody’s has also affirmed the long-term national scale issuer rating at Aa1.za.
As part of its rating decision, Moody’s indicated that the rating reflects Telkom’s overall strong credit metrics which provide adequate headroom to the company’s operating and competitive challenges.
“The company also has adequate levels of liquidity over the next 12 to 18 months with flexibility and sufficient levers to manage its cash flows.”