JOHANNESBURG, May 28 (Reuters) - South Africa’s rand sustained gains on Monday after Friday’s affirmation by S&P Global Ratings of the country’s sub-investment credit rating.
At 1404 GMT, the rand was trading at 12.4525 to the dollar, up 0.4 percent.
S&P kept South Africa’s investment grade rating at BB+ and the outlook as stable, saying that its fiscal position was still weak but that the economy would modestly improve in the next year.
“S&P has obviously stamped their approval in the belief that there can be a turnaround in the country’s fiscus if certain reforms are undertaken. We should see the rand strengthening. 12.50 to 12.30 is not unlikely, said Cheslyn Francis, an analyst at Afrifocus Securities.
On the bourse, stocks ended flat with Telkom and Tongaat Hullet among the biggest decliners after reporting weaker earnings. But ArcelorMittal’s South African unit surged after saying the sale of its stake in a Luxembourg-based JV would net $220 million.
The blue-chip JSE Top-40 index edged up 0.02 percent to 50,550 and the broader All-share index was off 0.1 percent at 56,857.
Fixed-line phone group Telkom fell 3.6 percent after it cut dividends as it reported an 18 percent fall in annual profit. Also weighed down by a dividend cut and decline in earnings, Tongaat lost 2.75 percent.
Elsewhere, ArcelorMittal’s South African unit jumped 5.4 percent after the steel maker said it would sell its 50 percent in Macsteel to joint venture partner Machold for $220 million.
In fixed income, the yield for the government bond due in 2026 was down 1 basis point to 8.44 percent.
Reporting by Tiisetso Motsoeneng and Patricia Aruo; editing by Andrew Roche