JOHANNESBURG, April 30 (Reuters) - Credit rating agency Moody's has given up the regulatory licence of its South African subsidiary to focus on serving cross-border investors and African issuers looking to attract international funding.
o The move by Moody's is part of adjustments to its business model, and it will continue to rate South African issuers from other locations.
o It is not expected to affect how Moody's rates South Africa's sovereign credit.
o South African banks use credit ratings from recognised agencies like Moody's to determine their minimum required regulatory capital and reserve funds for credit risk.
o A notice by South Africa's market conduct regulator, the Financial Sector Conduct Authority (FSCA), dated April 16 said: "Moody's Ratings-SA informed the Authority that it no longer wants to be registered as a credit rating agency in terms of the Act and that it is renouncing its registration".
o The notice said the Prudential Authority, which regulates banks, had requested an extension to the period in which local banks can still use ratings issued by Moody's Ratings-SA for regulatory purposes.
o "The Authority has considered the request and decided to extend the period to 24 months," the notice added.
o In a separate notice dated April 21, the Prudential Authority informed banks that it intends to derecognise Moody's Ratings-SA as an eligible external credit assessment institution.
o Asked for comment, a Moody's spokesperson said the agency would "support our customers with a relationship management presence from our office in Johannesburg," in line with its approach in markets across Asia and Latin America.
o The spokesperson said Moody's saw significant long-term growth potential in Africa, as shown by its acquisition of pan-African agency Global Credit Rating Company, which helps issuers raise capital in domestic debt markets.
(Reporting by Sfundo Parakozov. Editing by Alexander Winning and Mark Potter)
By Sfundo Parakozov
