Moody's places SA on review for possible downgrade

This comes after Standard and Poor's on Monday downgraded South Africa to junk status.

In a statement, Moody's says the decision to initiate a review for downgrade was prompted by the "abrupt change in leadership" in key government institutions.

"The review will allow Moody's to assess these risks and if the changes in leadership signal a weakening in the country's institutional, economic and fiscal strength," the agency says.

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On Monday, South Africa was downgraded to junk status less than a week after President Jacob Zuma announced wide-ranging changes to his Cabinet, including the axing of respected Finance minister Pravin Gordhan. 

"Changes within a government do not generally signal material changes in a country's credit profile. Here, however, the timing and scope of the reshuffle raises questions over the signal they send regarding the prospects for ongoing reforms, the underlying strength of South Africa's institutional framework, and the fragile recovery in the country's economic and fiscal position," Moody's says.

Moody's is expected to announce its decision later this week.