Question NW1393 to the Minister of Finance

Reply:

(a)  Total amount spent by Government on rating agencies fees

South Africa has solicited the credit rating services of Moody’s Investors Services (Moody’s), S&P Global Ratings (S&P), Fitch Ratings (Fitch) and the Japanese’ Ratings and Investment Information, Inc. (R&I). In terms of the contractual agreements, the government has to pay fees to the rating agencies for the services rendered.

Since April 2008 to May 2017, a total amount of R 81 451 873.00 has been paid to the rating agencies. The table link below illustrates the total spent in rands made to all the four solicited credit rating agencies. S&P is the highest paid rating agency followed by Moody’s.

http://pmg-assets.s3-website-eu-west-1.amazonaws.com/RNW1393Table-170605.pdf

(b) The detailed breakdown of such expenditure per rating agency:

(i) S&P:

S&P’s annual rating fees are based on:

• Annual surveillance;
• Rating of long term debt issuances;
• Ratings of short term debt issuances; and
• Ratings of the Commercial Paper and Medium Term Notes.

(ii) Moody’s:

Moody’s annual and quarterly rating fees are based on:

• Annual and quarterly credit surveillance;
• Ratings of all Non-US Medium Term Notes Programs;
• Ratings of all US Medium Term Notes;
• Ratings of all Global Medium Term Notes Programs;
• Ratings of all Commercial Paper/Short Term; and
• Ratings of all long term debt issuances and Medium Term Notes sales in all markets including local currency debt issuances.

(iii) Fitch

Fitch’s annual rating fees are based on:

• Annual surveillance;
• Ratings of debt issuance; and
• Expense reimbursement for reasonable travel and lodging expense incurred during the annual rating mission to the Republic of South Africa.

(iv) R&I

R&I’s annual rating fee is based on:

• On-going surveillance of the credit rating
• Foreign currency issuer rating;
• Domestic currency issuer rating; and
• Foreign currency short term rating.