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Rating Action:

Moody's takes action on eight South African corporates following sovereign downgrade and outlook change

13 Jun 2017

Johannesburg, June 13, 2017 -- Moody's Investors Service has taken rating actions on eight South African corporates.

Today's rating actions on eight South African corporates follow the weakening of the South African government's credit profile, as captured by Moody's similar rating action on the sovereign rating on 9 June 2017. For further information, refer to the sovereign press release https://www.moodys.com/research/-PR_367769

Moody's downgraded to Baa3 from Baa2 the long-term issuer ratings and changed the outlooks to negative from ratings under review of:

• The Bidvest Group Limited

• Growthpoint Properties Limited

Moody's has affirmed the Baa3 long-term issuer ratings and changed the outlooks to negative from stable of:

• Barloworld Limited

• Fortress Income Fund Limited

• Hyprop Investments Limited

• Telkom SA SOC Limited

The respective national scale ratings assigned to the above corporates as well as Consolidated Infrastructure Group Limited and Kagiso Tiso Holdings Proprietary Limited were affected by the revised national scale mapping table for South Africa.

A complete list of rating actions can be found at the end of this press release.

RATINGS RATIONALE

-- DOWNGRADE TO Baa3 ISSUER RATINGS OF BIDVEST AND GROWTHPOINT; CHANGE OF OUTLOOK TO NEGATIVE FROM RATING UNDER REVIEW

The downgrade of the issuer ratings to Baa3 from Baa2 and change of outlook on the ratings of The Bidvest Group Limited and Growthpoint Properties Limited to negative from ratings under review follows the downgrade and change of outlook on the South African government sovereign rating to Baa3/ negative and reflects the credit linkages of these corporates to the South African economy and their material exposure to the domestic operating environment. This concluded the review initiated by Moody's on 4 Apr 2017. The negative outlook reflects the uncertainty surrounding political developments in South Africa that has translated into depressed consumer and business confidence which flows through to lower growth prospects for these corporates.

THE BIDVEST GROUP LIMITED

The Bidvest Group Limited's (Bidvest or the Group) Baa3/Aa1.za long-term issuer ratings reflect the Group's (1) stable operational and financial profile; (2) diversified sources of revenue across a range of businesses; (3) low financial debt leverage, with healthy interest cover and good cash flow generation in the context of the high volume, low margin nature of many of its activities; and (4) experienced management team with a successful track record of organic growth and growth through acquisitions, which have been effectively integrated into the Bidvest network while being managed on a decentralized basis.

The rating is mainly constrained by (1) low growth environment, and weak business and consumer sentiment in South Africa (Baa3 negative); (2) event risk from debt-financed acquisitions that may overstretch current leverage levels; and (3) limited geographic diversification. The ratings also consider the credit linkage to the South African government bond rating given Bidvest's concentration in South Africa following its unbundling of its international Foodservices business.

As of 31 December 2016, Bidvest's approaching debt maturities and other cash demands, including capital expenditure, working capital requirements and dividend payments over the next 12 to 18 months are sufficiently covered by (1) positive operating cash flow generation; (2) existing cash and cash equivalents balances of ZAR3.6 billion (US$0.26 billion); (3) ZAR1.9 billion (US$0.14 billion) of marketable securities; and (4) unutilized 360-day committed lines of approximately ZAR8 billion (US$0.58 billion).

GROWTHPOINT PROPERTIES LIMITED

Growthpoint Properties Limited's ("Growthpoint" or the "Company") Baa3/Aaa.za long-term issuer ratings are supported by its strong market position as the largest primary listed REIT company in South Africa. The ratings are also based on the significant property portfolio size and quality that benefits from an active internal management team and produces solid, recurring rental income underpinned by (1) medium- to long-term leases; (2) contractual annual rent escalation clauses above inflation; (3) low vacancy rates; and (4) diversification by tenant base and property sector. The portfolio is geographically concentrated in the province of Gauteng, South Africa, but substantial investments over the past three years in Australia (Aaa stable), in Cape Town, South Africa, and more recently central and eastern Europe have broadened its geographical base. The ratings also factor Moody's expectation that Growthpoint's development activity will increase as tenant demand in South Africa improves but that the company will continue to limit development risk to only a moderate exposure and that its projects will be predominantly pre-let.

A constraining factor on the ratings is (1) the credit linkages to the government of South Africa given Growthpoint's operational concentration in South Africa, with 73% property exposure and 84% of distributable income derived from operations within South Africa; (2) the high proportion of debt that is secured equivalent to 73% of total debt; as well as (3) the low level of unencumbered assets to gross assets of 33%. A further constraint is the sizable approaching debt maturities over the next three years of around 62%. We note that Growthpoint has in the past been successful in addressing approaching debt maturities around 12 months before the maturity date. All data points are as of the last twelve months (LTM) to 31 December 2016 unless expressly stated otherwise and as per Moody's standard adjustments.

-- AFFIRMATION OF Baa3 ISSUER RATINGS OF BARLOWORLD; FORTRESS INCOME FUND; HYPROP INVESTMENTS; AND TELKOM SA WITH A NEGATIVE OUTLOOK

The change of outlook on the ratings of these corporates follows the change of outlook on the Baa3 sovereign rating of South Africa and reflects the credit linkages of these corporates with the South African economy and their material exposure to the domestic operating environment. The negative outlook reflects the uncertainty surrounding political developments in South Africa that has translated into depressed consumer and business confidence which flows through to lower growth prospects for these corporates.

BARLOWORLD LIMITED

Barloworld Limited's (Barloworld) Baa3/Aa1.za long-term issuer ratings recognise its leading competitive positions in the markets it operates in and is supported by strong brand offerings and stable long term relationships with its principal suppliers. The ratings also consider Barloworld's diversified product mix and its resilient business model whereby its integrated after sales support segments are able to soften the impact from the decline in new equipment and vehicle sales during cyclical downturns.

Barloworld's credit metrics have historically been relatively stable and are supported by the company's ongoing commitment to balanced financial policies. While adjusted debt/EBITDA of 2.2x is strongly positioned within the rating category, Barloworld's EBIT/interest expense cover of 3.2x and operating margin of 6.8% are weakly positioned (as of the last twelve months (LTM) to 31 March 2017) leaving it susceptible to weaker operating performance and a rising interest rate environment. The ratings also consider Barloworld's good liquidity position resulting from its favourable debt maturity profile.

Barloworld's ratings are constrained by its exposure to (1) the Sub-Saharan African and Russian markets, leaving it exposed to the weak economic conditions of these countries; and (2) more cyclical mining, agricultural, construction and motor related industries which are currently experiencing volatile global commodity prices and weaker local consumer environments. In addition, Barloworld is exposed to key supplier risk as most of its operations depend on its position as the principal agent for a number of high profile brands such as Caterpillar Inc. (A3 stable). This is mitigated by its long term relationships and close strategic alignment as well as, in some cases, its fixed term contractual agreements with its principals, which we expect to continue.

FORTRESS INCOME FUND LIMITED

Fortress Income Fund Limited's (Fortress or the Fund) Baa3/Aa1.za long-term issuer ratings are underpinned by its niche sector exposure to regional retail centres along key transportation nodes and recently acquired high quality logistics properties across South Africa, which produce stable recurring income underpinned by positive rental increases and moderate to low vacancy rates (6.0% as of 31 December 2016).

The rating is also supported by (1) its moderate scale relative to peers across EMEA with gross assets totalling ZAR59.7 billion (USD3.5 billion); (2) strong credit metrics for its rating level which include low leverage, as measured by adjusted total debt / gross assets of 24.4% and moderate fixed charge coverage, as measured by adjusted year-to-date EBITDA / (interest expense plus capitalised interest) of 2.9x; (3) a broadly diversified portfolio by property sector, tenants and location with offshore listed investments providing Rand hedged foreign currency cash flows; and (4) financial flexibility to pursue debt funded investments or accommodate a moderate downturn on the portfolio.

At the same time, the ratings assigned also factor (1) exposure to a slowing South African economy, notably through its income exposure to regional shopping centres (approximately 36% of total monthly rental income) where the tenants are exposed to lower LSM (living standards measure) shoppers who are more sensitive to the state of the South African economy; (2) its equity stakes in listed local and offshore property investments, which expose the Fund to market volatility, given it represents 50% of total tangible assets; (3) a high level of secured debt at 89% of total gross debt in its capital structure and a moderate percentage of gross assets that are encumbered of 48.8%, and (4) a high proportion of debt maturing in the next three years (46% of total outstanding debt).

HYPROP INVESTMENTS LIMITED

Hyprop Investments Limited's (Hyprop) Baa3/Aa1.za long-term issuer ratings are supported by the high quality retail portfolio, which benefits from active management producing solid, recurring retail income, supported by low vacancies (1.1% as of 31 December 2016) and well-positioned retail assets. The ratings also incorporate moderately positioned credit metrics as measured by total debt-to-gross assets of 34.7% and high fixed-charge cover of 3.5x (according to our standard definitions and adjustments, as of LTM to 31 December 2016) and factor in Hyprop's conservative approach to development risk.

At the same time, the ratings assigned also factor (1) the moderate size of the portfolio and smaller scale of operations relative to local peers, as measured by total assets; (2) the high exposure to the retail sector, as well as high geographic concentration in the Gauteng province (52% of the South African property assets); (3) the small but growing exposure to retail properties across the rest of Africa and Central and Eastern Europe (currently Ghana (B3 stable), Zambia (B3 negative), Nigeria (B1 stable), Serbia (Ba3 stable) and Montenegro (B1 negative)), which improves diversification but increases Hyprop's operational risk and; (4) high percentage of secured debt (75% of total debt) in its capital structure and the high percentage of gross assets that are encumbered (64.3% as a percentage of gross assets). All figures are as of the last 12 months (LTM) to 31 December 2016 and adjusted per Moody's standard definitions and adjustments.

TELKOM SA SOC LIMITED

Telkom SA SOC Limited's (Telkom) Baa3/Aa1.za long-term issuer ratings reflect the application of our rating methodology for government-related issuers (GRI) that takes into account Telkom's strategic importance to the South African economy, resulting in our assessment of high default dependence and moderate support from the South African government and baseline credit assessment (BCA) of baa3, which results in a Baa3 rating and negative outlook that is in line with the government of South Africa bond ratings and outlook.

Telkom's BCA of baa3 continues to reflect the transformation process of its business model and the execution challenges faced through (1) its strategies to increase adoption of information communication technology (ICT) among its business customers; (2) customer service improvements; and (3) network upgrades for its improved bundled offerings. The current BCA is also based on Telkom's low leverage and overall strong credit metrics for the rating category. This offsets to some degree Telkom's operating and competitive challenges, as well as the larger capital investments required to deliver on its key strategies for the upcoming years. The rating further assumes that Telkom will not experience any difficulties in terms of liquidity, refinancing or funding and so will be able to meet its financial and operating commitments. To the extent these would arise, further downward pressure would be exerted on the rating or outlook. However, we recognise the company's position as a leading telecommunications operator, with a leading market position in South Africa's fixed-line business and a growing presence in broadband and mobile offerings.

-- RAISED THE NATIONAL SCALE CORPORATE FAMILY RATINGS OF CIG AND KTH WITH A STABLE OUTLOOK

CONSOLIDATED INFRASTRUCTURE GROUP LIMITED

Consolidated Infrastructure Group's (CIG) Ba2/A1.za global and national scale corporate family ratings reflect (1) CIG's position as a leading niche market player in Sub-Saharan Africa, with over 29 years of operating experience in its core business, Conco; (2) its strong market position in most of the sub-sectors in which it operates; (3) a growing order book of ZAR6.6 billion (US$505 million), creating good visibility for the next 12 to 18 months; and (4) strong energy infrastructure spend fundamentals throughout Africa. In addition, the ratings are also supported by moderate financial metrics with leverage (as measured by adjusted debt/EBITDA) of 2.7x as of last 12 months to 28 February 2017.

These considerations are partially offset by (1) the small size of the Group when compared to its larger global peers; (2) the weaker institutional strength (risk of doing business) of the rest of Africa (41% of Group revenue) relative to South Africa; (3) reliance on key customers within its Conco operations (the top 10 customers represent 51% of the pipeline); (4) cyclical operating environment experienced by its building divisions (11% of Group revenues); and (5) exposure to contingent liabilities totalling ZAR1.9 billion in the form of outstanding performance guarantees, although Moody's acknowledges that over the last 29 years no performance guarantees have been exercised by a customer.

The stable outlook reflects Moody's view that CIG will continue to maintain its current operating profile in terms of EBITDA margins and manage working capital demands in the face of a more challenging economic environment, sustain a healthy order book going forward and continue to maintain a sound liquidity profile at all times.

KAGISO TISO HOLDINGS PROPRIETARY LIMITED

Kagiso Tiso Holdings Proprietary Limited's (KTH's) Ba2 global Corporate Family Rating (CFR) and A2.za national scale CFR are supported by (1) the scale of its investment portfolio with a combined gross total portfolio value of around ZAR13.9 billion, as at 30 June 2016; (2) its moderate level of market value leverage (defined as: net debt / estimated market value of portfolio of assets) of approximately 32.3% for financial year ending (FYE) 30 June 2016; (3) its increased influence and control of key investments; (4) the track record that KTH has developed in pursuing a conservative approach to its investment strategy and financial policies; and (5) black ownership credentials driving future value accretive transactions.

KTH's ratings also factor (1) its high concentration of investments within South Africa, which are exposed to a challenging macro-economic environment; (2) our expectation that KTH's asset concentration will remain constrained as it focuses on key pillar investments, which could also begin to limit its business sector diversification; (3) a weakening interest coverage of 1.4x as of 30 June 2016 (calculated as: (funds from operations at the holding company + interest expense) / interest expense) and the risk that, in a liquidity constrained environment, debt serviceability of the debt at the centre could be adversely impacted if investee companies reduce or discontinue dividend payments; and (4) KTH's complex shareholding structure of individual investments.

The stable outlook is based on our expectation that KTH will continue to build a track record of sound corporate and financial governance, accompanied by transparent monitoring and reporting. The outlook also assumes that there will be no material change in KTH's market value leverage, asset concentration and business diversity. In addition, the outlook assumes KTH's liquidity profile does not deteriorate.

WHAT COULD CHANGE THE RATINGS UP/DOWN

THE BIDVEST GROUP LIMITED

As a result of the high degree of rating linkage to the South African government bond rating any future rating pressure on Bidvest's ratings and outlook will have to be considered in the context of the South African long term bond rating position and outlook at the time.

Subject to the South African government bond rating, Moody's would consider an upgrade if: (1) Bidvest is able to grow in size and geographic diversification; (2) Moody's adjusted gross debt to EBITDA is materially under 3.0x on a sustainable basis; (3) Moody's adjusted EBITA to interest expense is well above 4.0x; and (4) Bidvest maintains positive sustainable free cash flow.

Moody's would consider a downgrade if one or a combination of the following occurs (1) erosion in operating performance or higher debt levels such that Moody's adjusted EBITA to interest expense remains sustainably below 3.5x or Moody's adjusted gross debt to EBITDA trends sustainably above 3.0x; (2) failure to maintain a good liquidity profile with sizable cash balances; (3) Free cash flows are negative; or (4) a downgrade of the South African sovereign bond rating.

GROWTHPOINT PROPERTIES LIMITED

We do not expect any further upward rating action as Growthpoint's rating is likely to be constrained at the same level as South Africa's government bond rating given the bulk of Growthpoint's cash flows and property exposure are derived in South Africa.

Any positive rating action would further depend on financial metrics such that (1) leverage as measured by debt to gross assets is around 35% on a sustainable basis; (2) fixed charge cover is above 3.0x; and (3) the level of unencumbered assets to gross assets improves towards 40% while maintaining the level of secured debt to gross assets around 25% or below.

Growthpoint's rating would come under downward pressure in the event that any of the following (1) South Africa's government bond rating is downgraded from Baa3; (2) the company's liquidity risk profile deteriorates; (3) unexpected difficulties integrating acquisitions that negatively impact operational and cash flow performance; (4) leverage in terms of total debt to gross assets trends towards 40%; (5) fixed charge coverage (as measured by EBITDA to interest expense) trends towards 2.0x; or (6) if secured debt to property assets exceeds 30% or there is a material decline in unencumbered assets from the current levels.

BARLOWORLD LIMITED

We do not expect any further upward rating action as Barloworld's rating is likely to be constrained at the same level as South Africa's government bond rating given the bulk of Barloworld's cash flows operational exposure is derived in South Africa and the rest of Africa.

Subject to the government of South Africa's bond rating, Moody's would consider an upgrade if Barloworld (1) is able to grow in size and geographic diversification, while maintaining its financial performance under challenging operating conditions; (2) adjusted debt/EBITDA were to fall below 2.0x and EBIT / interest increases above 4.0x; and (3) a positive and sustainable free cash flow position.

Pressure on the ratings would develop following a (1) downgrade of the government of South Africa's bond rating; (2) operating performance were to weaken, to the extent there are revenue and operating margin declines translating into weaker debt protection measures such that debt / EBITDA rises above 3.0x or its EBIT/ interest expense falls below 2.5x for an extended period of time; and (3) if the company's liquidity risk profile deteriorates.

FORTRESS INCOME FUND LIMITED

We do not expect any further upward rating action as Fortress' rating is likely to be constrained at the same level as South Africa's government bond rating given the bulk of Fortress' net income (80%) and property exposure (59%) are derived in South Africa.

Any positive rating action would further depend on (1) the Fund continuing to exhibit growing revenues, improving operating margins and demonstrating prudent operating policies; (2) leverage, as measured by adjusted total debt/gross assets, remains at around 25%; (3) fixed charge cover remains above 3.0x; and (4) percentage of unencumbered assets to total assets demonstrates an increasing trend over time.

Fortress' rating would come under downward pressure in the event that any of the following (1) South Africa's government bond rating is downgraded from Baa3; (2) Fortress' failure to address near term debt maturities in a timely manner; (3) Increasing reliance on income and/or asset value from listed investments; (4) debt-financed acquisition or adverse changes in its portfolio, such that leverage in terms of adjusted total debt to gross assets is trending towards 35% or fixed charge coverage approaches 2.5x; or (5) unexpected operating difficulties that negatively affect operational performance or cash flows.

HYPROP INVESTMENTS LIMITED

We do not expect any further upward rating action as Hyprop's rating is likely to be constrained at the same level as South Africa's government bond rating given the bulk of Hyprop's net income (92%) and property exposure (82%) are derived in South Africa.

Any positive rating action would further depend on strengthening financial metrics such that Hyprop (1) continues to grow scale with stable operating margins and broaden its geographic footprint into jurisdictions with strong credit profiles; (2) follows prudent financial and operating policies; (3) maintains overall strong liquidity profile with ample headroom on its covenants; (4) were to maintain leverage - as measured by adjusted total debt/gross assets - below 30% on a sustainable basis.

Hyprop's rating would come under downward pressure in the event that any of the following (1) South Africa's government bond rating is downgraded from Baa3; (2) Hyprop's failure to maintain an adequate liquidity profile; (3) Debt-financed acquisition or change in capital structure, such that leverage in terms of adjusted total debt/gross assets is trending above 35% or fixed-charge coverage trends below 3.0x on a sustainable basis; or (4) Unexpected operating difficulties that negatively affect operational performance or cash flows.

TELKOM SA SOC LIMITED

As a result of the high degree of rating linkage to the South African government bond rating any future rating pressure on Telkom's ratings and outlook will have to be considered in the context of the South African long term bond rating position and outlook at the time.

Subject to the South African government bond rating, Moody's would consider an upgrade if (1) Telkom is successful in its turnaround strategy to diversify the business away from the structural decline in voice revenues, (2) right sizes its cost base and demonstrates that its mobile business remain profitable such that the company's consolidated EBITDA margin is on an improving trajectory above 30% on an adjusted basis.

Negative pressure on Telkom's rating or outlook will be prompted by higher-than-expected competitive threats or execution challenges in its mobile offering or bundled services that leads towards further operating margin declines. Quantitatively, negative pressure is likely if EBITDA margin falls and is sustained below 20% (for the LTM to 30 September 2016 - 28.2%) and/or if leverage, as measured by debt/EBITDA increases towards 2.5 times (for the LTM to 30 September 2016 -- 0.8x). Negative pressure would also arise if the company sustained retained cash flow/total debt below 25% (currently above 110%) as a result of higher debt levels or dividend distribution. All metrics are according to our standard definitions and analytic adjustments.

In addition to the factors listed above affecting its BCA, Telkom's ratings may be negatively affected by changes in the ratings of the supporting Government, or by changes in our assessments of default dependence and support described in the rating rationale.

CONSOLIDATED INFRASTRUCTURE GROUP LIMITED

CIG's rating could be upgraded if (1) CIG's track record as a rated entity builds; (2) CIG significantly improves in terms of size and sector diversification (3) client concentration exposure reduces; and (4) evidence that financial performance under more challenging operating conditions is maintained.

A downgrade could be driven by (1) leverage in terms of gross debt/EBITDA exceeding 3.0x and/or EBIT/ Interest expense falling below 3.0x, both on a sustainable basis; (2) free cash flow-to-gross debt is negative; (3) Unexpected operating difficulties that negatively affect operational performance or cash flows and (4) CIG's liquidity profile deteriorating.

KAGISO TISO HOLDINGS PROPRIETARY LIMITED

Positive pressure on KTH's rating could build over time as a result of (1) a decrease in market value leverage closer to 30%, on a sustained basis, accompanied with the removal of BEE lock-in clauses from its larger investments and a simplification of some of the more complex investment structures; (2) improved interest coverage above 2.5x, on a sustained basis; (3) a consistent track record of prudent financial policies; (4) improved corporate governance standards in terms of more frequent and transparent reporting of third-party independent investment valuations and overall investment strategy; and (5) prudent investment strategy over the longer term without significant volatilities or spikes in market-value based leverage.

Moody's would also view positively a staggered debt maturity profile accompanied by a diverse funding mix.

Negative pressure on KTH's ratings could arise should (1) market value leverage trend towards 40%; (2) the interest coverage ratio sustainably weaken towards 1.5x and/or does not remain supported by solid liquidity for meeting debt maturities and committed cash outlays; (3) any general deterioration in KTH's current disclosure standards; and (4) a change in investment strategy towards capital allocation to more volatile investments with greater underlying business and liquidity risk.

List of affected ratings:

Raised:

..Issuer: Kagiso Tiso Holdings Proprietary Limited

.... NSR Corporate Family Rating, Raised to A2.za from Baa1.za

.... NSR ST Issuer Rating, Raised to P-1.za from P-2.za

..Issuer: Consolidated Infrastructure Group Limited

.... NSR ST Issuer Rating, Raised to P-1.za from P-2.za

.... NSR Corporate Family Rating, Raised to A1.za from A3.za

..Issuer: Telkom SA SOC Limited

.... NSR LT Issuer Rating, Raised to Aa1.za from Aa2.za

..Issuer: Barloworld Limited

.... NSR LT Issuer Rating, Raised to Aa1.za from Aa3.za

..Issuer: Fortress Income Fund Limited

.... NSR LT Issuer Rating, Raised to Aa1.za from Aa3.za

..Issuer: Hyprop Investments Limited

.... NSR LT Issuer Rating, Raised to Aa1.za from Aa3.za

Downgrades:

..Issuer: Bidvest Group Limited, The

.... ST Issuer Rating, Downgraded to P-3 from P-2, on review for downgrade

.... LT Issuer Rating, Downgraded to Baa3 from Baa2, on review for downgrade

..Issuer: Growthpoint Properties Limited

.... ST Issuer Rating, Downgraded to P-3 from P-2, on review for downgrade

.... LT Issuer Rating, Downgraded to Baa3 from Baa2, on review for downgrade

....Senior Unsecured Medium-Term Note Program, Downgraded to (P)P-3 from (P)P-2, on review for downgrade

....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Baa3 from (P)Baa2, on review for downgrade

....Senior Unsecured Regular Bond/Debenture, Downgraded to P-3 from P-2, on review for downgrade

....Senior Unsecured Regular Bond/Debenture, Downgraded to Baa3 from Baa2, on review for downgrade

Affirmations:

..Issuer: Bidvest Group Limited, The

.... NSR ST Issuer Rating, Affirmed P-1.za

.... NSR LT Issuer Rating, Affirmed Aa1.za

..Issuer: Telkom SA SOC Limited

.... LT Issuer Rating, Affirmed Baa3

..Issuer: Barloworld Limited

.... ST Issuer Rating, Affirmed P-3

.... LT Issuer Rating, Affirmed Baa3

.... NSR ST Issuer Rating, Affirmed P-1.za

..Issuer: Fortress Income Fund Limited

.... ST Issuer Rating, Affirmed P-3

.... LT Issuer Rating, Affirmed Baa3

.... NSR ST Issuer Rating, Affirmed P-1.za

..Issuer: Growthpoint Properties Limited

.... NSR ST Issuer Rating, Affirmed P-1.za

.... NSR LT Issuer Rating, Affirmed Aaa.za

.... NSR Senior Unsecured Medium-Term Note Program, Affirmed (P)Aaa.za

.... NSR Senior Unsecured Medium-Term Note Program, Affirmed (P)P-1.za

..Issuer: Hyprop Investments Limited

.... ST Issuer Rating, Affirmed P-3

.... LT Issuer Rating, Affirmed Baa3

.... NSR ST Issuer Rating, Affirmed P-1.za

Outlook Actions:

..Issuer: Kagiso Tiso Holdings Proprietary Limited

....Outlook, Remains Stable

..Issuer: Bidvest Group Limited, The

....Outlook, Changed To Negative From Rating Under Review

..Issuer: Consolidated Infrastructure Group Limited

....Outlook, Remains Stable

..Issuer: Telkom SA SOC Limited

....Outlook, Changed To Negative From Stable

..Issuer: Barloworld Limited

....Outlook, Changed To Negative From Stable

..Issuer: Fortress Income Fund Limited

....Outlook, Changed To Negative From Stable

..Issuer: Growthpoint Properties Limited

....Outlook, Changed To Negative From Rating Under Review

..Issuer: Hyprop Investments Limited

....Outlook, Changed To Negative From Stable

PRINCIPAL METHODOLOGIES

The principal methodology used in rating Bidvest Group Limited, The was Business and Consumer Service Industry published in October 2016.

The principal methodology used in rating Consolidated Infrastructure Group Limited was Construction Industry published in March 2017.

The principal methodology used in rating Kagiso Tiso Holdings Proprietary Limited was Investment Holding Companies and Conglomerate published in December 2015.

The principal methodology used in rating Barloworld Limited was Retail Industry published in October 2015.

The methodologies used in rating Telkom SA SOC Limited were Telecommunications Service Providers published in January 2017, and Government-Related Issuers published in October 2014.

The principal methodology used in rating Fortress Income Fund Limited, Growthpoint Properties Limited and Hyprop Investments Limited was Global Rating Methodology for REITs and Other Commercial Property Firms published in July 2010.

Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016 entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1060333.

THE BIDVEST GROUP LIMITED

Founded in 1988 and based in Johannesburg, South Africa, The Bidvest Group Limited is a service, trading and distribution company with operations in South Africa and Namibia. Its businesses operates nine divisions: Automotive, Commercial Products, Electrical, Financial Services, Freight, Office & Print, Services, Bidvest Namibia (Namibia Commercial and Fisheries) and Bidvest Corporate (property portfolio and associate investments). On 30 May 2016, Bidvest unbundled its international Foodservices business making it a predominantly South African focused company.

GROWTHPOINT PROPERTIES LIMITED

Growthpoint Properties Limited was established in 1987 and is the largest primary listed Real Estate Investment Trust (REIT) by gross assets (ZAR126 billion or US$9.2 billion) and by market capitalisation (ZAR73.3 billion or US$5.4 billion) in South Africa. Its activities focus on a portfolio of 473 retail, office and industrial properties that are geographically diversified across South Africa (Baa3 negative). Growthpoint also holds a 65% controlling stake in Growthpoint Properties Australia Ltd (Growthpoint Australia) (Baa2 stable - senior secured), which currently owns 59 properties valued at AUS$3.1 billion (ZAR31.6 billion or US$2.3 billion) and a 50% of the V&A Waterfront in Cape Town valued at ZAR7.9 billion (US$0.6 billion).

BARLOWORLD LIMITED

Barloworld, headquartered in South Africa, is a leading distributor and after sales support provider of heavy equipment and motor vehicles for leading international brands across Sub Saharan Africa, Russia and Iberia. It also provides integrated rental, fleet management, product support and logistics solutions. The core divisions of the group comprise of (1) Equipment which provides end to end solutions across the value chain on behalf Caterpillar Inc. to the mining, construction, industrial sectors; (2) Automotive which operates the motor retail, car rental, and fleet management services; and (3) Logistics which provide logistics management transport and supply chain optimisation.

FORTRESS INCOME FUND LIMITED

Fortress Income Fund Limited is a hybrid Real Estate Investment Trust listed on the Johannesburg Stock Exchange (JSE). Fortress owns and operates commercial properties across South Africa (Baa3 negative), as well as invests in listed property securities in South Africa, Europe and the United Kingdom. Fortress' direct properties comprise predominately of regional retail centres close to public transport nodes and logistics warehouses across South Africa.

HYPROP INVESTMENTS LIMITED

Hyprop Investments Limited is one of South Africa's largest Johannesburg Stock Exchange (JSE) listed specialist shopping centre Real Estate Investment Trust ("REIT"), and one of South Africa's oldest listed property companies (1988). Its activities include direct investments in predominately retail property assets in South Africa, and a growing exposure to retail properties in Sub-Saharan African (excluding South Africa) and more recently Central and Eastern Europe. Hyprop's head office is in Johannesburg, South Africa.

As of 31 December 2016, Hyprop's investment in South Africa consisted of 16 properties valued at ZAR28.1 billion ($2.1 billion), and investments totalling ZAR3.1 billion ($226 million) in Sub-Saharan Africa and ZAR[1.9 billion] ($120 million) in Central and Eastern Europe.

TELKOM SA SOC LIMITED

Telkom SA SOC Limited is the dominant South African fixed-line and the fourth incumbent mobile operator which controls approximately 3.0 million telephone access lines, most of which are connected to digital exchanges and 4.0 million active mobile subscribers, representing around 5% of the South African mobile market. As of 31 March 2017, the company has the largest fibre network across South Africa (approx. 80% of the South African fibre network) supporting more than a million broadband subscribers.

Telkom is listed on the Johannesburg Stock Exchange and is 39.3% owned by the South African Government, 11.9% by Public Investment Corporation (PIC) and the remaining 48.8% is free float, as of 31 March 2017.

CONSOLIDATED INFRASTRUCTURE GROUP LIMITED

Consolidated Infrastructure Group Limited (CIG or the Group) has been in existence as a listed company on the Johannesburg Stock Exchange since 2007. It currently operates through four divisions across 22 sub-Saharan African countries: (1) Consolidated Power Projects (Pty) Ltd (Conco), a leading provider in South Africa and the African continent of turnkey solutions in the power and electrical industry; (2) Building Materials, comprising two businesses: West End Claybrick (Pty) Limited, a manufacturer of clay bricks and roof tiles; and Drift Supersand (Pty) Limited, a Gauteng-based supplier of aggregates (sand, gravel and stone) to various sectors in the construction industry; (3) Tension Overhead Electrification Pty Ltd (Tractionel), specialises in electrification of railways and overhead traction equipment; and (4) Angolan Environmental Services Ltd (AES), a service provider to the oil and gas rigs located off the coast of Angola.

KAGISO TISO HOLDINGS PROPRIETARY LIMITED

Headquartered in Johannesburg, South Africa, Kagiso Tiso Holdings Proprietary Limited is an investment holding company that manages a portfolio of listed and unlisted investments mostly in South Africa, with a growing investment exposure to the rest of Africa. KTH has a combined gross total portfolio value of around ZAR13.9 billion, as of FYE2016.

Glossary of Terms and Acronyms

Affirmation: An Affirmation is a public statement that the current Credit Rating assigned to an issuer or debt obligation, which is not currently under review, continues to be appropriately positioned.

Baseline Credit Assessment (BCA): Baseline credit assessments (BCAs) are opinions of issuers' standalone intrinsic strength, absent any extraordinary support from an affiliate or a government. Baseline Credit Assessments are not Credit Ratings.

Capital Expenditures or Capex: This includes gross expenditures for property, plant and equipment and intangible assets.

Corporate Family Rating: Moody's Corporate Family Ratings (CFRs) are long-term ratings that reflect the likelihood of a default on a corporate family's contractually promised payments and the expected financial loss suffered in the event of default. A CFR is assigned to a corporate family as if it had a single class of debt and a single consolidated legal entity structure.

Credit Rating: A Credit Rating is an opinion from Moody's Investors Service (MIS) regarding the creditworthiness of an entity, a debt or financial obligation, debt security, preferred share or other financial instrument, or of an issuer of such a debt or financial obligation, debt security, preferred share or other financial instrument, issued using an established and defined ranking system of rating categories.

Debt: Long term debt (including liability for capital leases) plus short term debt plus current portion of long term debt. May also be adjusted to include other long term obligations, such as leases and pensions.

Default Dependence: Default dependence reflects the joint susceptibility of a Government-Related Issuer and its supporting government to adverse circumstances that simultaneously move them closer to default. Default dependence is reflected as one of four levels: low (30%), moderate (50%), high (70%) and very high (90%).

EBIT: Pre-tax income plus interest.

EBITA: EBIT plus amortisation of intangible assets. EBITA and EBITDA may be used as an indication of earnings available to service debt and capital expenses.

EBITDA: EBIT plus depreciation plus amortisation of intangible assets. EBITA and EBITDA may be used as an indication of earnings available to service debt and capital expenses.

GRI (Government-Related Issuer): GRI is an entity with full or partial government ownership or control, a special charter, or a public policy mandate from the national, regional or local government. Moody's generally uses 20% as the minimum government ownership level before considering an issuer to be a GRI.

Issuer Rating: Issuer Ratings are opinions of the ability of entities to honor senior unsecured financial counterparty obligations and contracts.

Moody's Financial Adjustments, "Adjustments" or "as-Adjusted" statistics: Moody's adjusts financial statements to better reflect the underlying economics of transactions and events and to improve the comparability of financial statements. Moody's computes credit-relevant ratios using adjusted data and base our debt ratings, in part, on those ratios.

National Scale Long Term Rating: Moody's long-term National Scale Ratings (NSRs) are opinions of the relative creditworthiness of issuers and financial obligations within a particular country. NSRs are not designed to be compared among countries; rather, they address relative credit risk within a given country.

National Scale Short Term Rating: Moody's short-term NSRs are opinions of the ability of issuers in a given country, relative to other domestic issuers, to repay debt obligations that have an original maturity not exceeding one year. Short term NSRs in one country should not be compared with short-term NSRs in another country, or with Moody's global ratings.

Net Debt: Debt, less cash and cash-like current assets on the balance sheet.

Operating Margin: The ratio of operating revenue less operating expenditures over operating revenue, which measures the issuer's ability to contain operating expenditures below operating revenues.

Outlook: An Outlook is an opinion regarding the likely direction of an issuer's rating over the medium term.

Rating Outlook: A Moody's rating outlook is an opinion regarding the likely rating direction over the medium term. Rating outlooks fall into four categories: Positive (POS), Negative (NEG), Stable (STA), and Developing (DEV). Outlooks may be assigned at the issuer level or at the rating level.

Rating Review: A rating review indicates that a rating is under consideration for a change in the near term. A rating can be placed on review for upgrade (UPG), downgrade (DNG), or more rarely with direction uncertain (UNC). A review may end with a rating being upgraded, downgraded, or confirmed without a change to the rating. Ratings on review are said to be on Moody's "Watchlist" or "On Watch".

For further information on these definitions or on Moody's ratings symbols, please consult the Rating Symbols and Definitions document on www.moodys.com

REGULATORY DISCLOSURES

The rating for MDY:821785765, NSR LT Issuer Rating, ISSUER RATING, ZAR of Bidvest Group Limited, The was initially assigned on 02 Dec 2009 and the last Credit Rating Action was taken on 19 Dec 2016.

The rating for MDY:821785765, NSR ST Issuer Rating, ISSUER RATING, ZAR of Bidvest Group Limited, The was initially assigned on 24 Mar 2010 and the last Credit Rating Action was taken on 19 Dec 2016.

The rating for MDY:821785765, LT Issuer Rating, ISSUER RATING, ZAR of Bidvest Group Limited, The was initially assigned on 11 May 2016 and the last Credit Rating Action was taken on 04 Apr 2017.

The rating for MDY:821785765, ST Issuer Rating, ISSUER RATING, ZAR of Bidvest Group Limited, The was initially assigned on 11 May 2016 and the last Credit Rating Action was taken on 04 Apr 2017.

The rating for MDY: 823118674, NSR Corporate Family Rating, ISSUER RATING, ZAR of Consolidated Infrastructure Group Limited was initially assigned on 16 Mar 2017 and the last Credit Rating Action was taken on 16 Mar 2017.

The rating for MDY: 823102129, NSR ST Issuer Rating, ISSUER RATING, ZAR of Consolidated Infrastructure Group Limited was initially assigned on 09 Mar 2012 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY: 825538328, NSR Corporate Family Rating, ISSUER RATING, ZAR of Kagiso Tiso Holdings Proprietary Limited was initially assigned on 18 Apr 2017 and the last Credit Rating Action was taken on 18 Apr 2017.

The rating for MDY: 823086032, NSR ST Issuer Rating, ISSUER RATING, ZAR of Kagiso Tiso Holdings Proprietary Limited was initially assigned on 17 Jan 2012 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY: 807720798, NSR LT Issuer Rating, ISSUER RATING, ZAR of Telkom SA SOC Limited was initially assigned on 07 Apr 2008 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY: 807720798, LT Issuer Rating, ISSUER RATING of Telkom SA SOC Limited was initially assigned on 23 Jun 2005 and the last Credit Rating Action was taken on 01 Oct 2012.

The rating for MDY: 807720798, LT Issuer Rating, ISSUER RATING, ZAR of Telkom SA SOC Limited was initially assigned on 20 Jul 2004 and the last Credit Rating Action was taken on 01 Oct 2012.

The rating for MDY:825083249, NSR LT Issuer Rating, ISSUER RATING, ZAR of Barloworld Limited was initially assigned on 02 Jun 2016 and the last Credit Rating Action was taken on 02 Jun 2016.

The rating for MDY:825083249, NSR ST Issuer Rating, ISSUER RATING, ZAR of Barloworld Limited was initially assigned on 02 Jun 2016 and the last Credit Rating Action was taken on 02 Jun 2016.

The rating for MDY:825083249, LT Issuer Rating, ISSUER RATING, ZAR of Barloworld Limited was initially assigned on assigned on 02 Jun 2016 and the last Credit Rating Action was taken on 02 Jun 2016.

The rating for MDY:825083249, ST Issuer Rating, ISSUER RATING, ZAR of Barloworld Limited was initially assigned on assigned on 02 Jun 2016 and the last Credit Rating Action was taken on 02 Jun 2016.

The rating for MDY:824813304, NSR LT Issuer Rating, ISSUER RATING, ZAR of Fortress Income Fund Limited was initially assigned on 30 Nov 2015 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:824813304, NSR ST Issuer Rating, ISSUER RATING, ZAR of Fortress Income Fund Limited was initially assigned on 30 Nov 2015 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:824813304, LT Issuer Rating, ISSUER RATING, ZAR of Fortress Income Fund Limited was initially assigned on 11 May 2016 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:824813304, ST Issuer Rating, ISSUER RATING, ZAR of Fortress Income Fund Limited was initially assigned on 11 May 2016 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:821834963, NSR LT Issuer Rating, ISSUER RATING, ZAR of Growthpoint Properties Limited was initially assigned on 20 Oct 2009 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:821834963, NSR ST Issuer Rating, ISSUER RATING, ZAR of Growthpoint Properties Limited was initially assigned on 20 Oct 2009 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:821834963, LT Issuer Rating, ISSUER RATING, ZAR of Growthpoint Properties Limited was initially assigned on 20 Oct 2009 and the last Credit Rating Action was taken on 04 Apr 2017.

The rating for MDY:821834963, ST Issuer Rating, ISSUER RATING, ZAR of Growthpoint Properties Limited was initially assigned on 20 Oct 2009 and the last Credit Rating Action was taken on 04 Apr 2017.

The rating for MDY:822614442, LT Senior Unsecured, BOND, ZAR of Growthpoint Properties Limited was initially assigned on 17 Jun 2011 and the last Credit Rating Action was taken on 04 Apr 2017.

The rating for MDY:822614444, ST Senior Unsecured, BOND, ZAR of Growthpoint Properties Limited was initially assigned on 17 Jun 2011 and the last Credit Rating Action was taken on 04 Apr 2017.

The rating for MDY:821835006, NSR LT Senior Unsecured MTN, SOUTH AFRICAN MTN PROGRAM, ZAR of Growthpoint Properties Limited was initially assigned on 20 Oct 2009 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:821835006, NSR ST Senior Unsecured MTN, SOUTH AFRICAN MTN PROGRAM, ZAR of Growthpoint Properties Limited was initially assigned on 20 Oct 2009 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:821835006, LT Senior Unsecured, MTN, ZAR of Growthpoint Properties Limited was initially assigned on 11 May 2016 and the last Credit Rating Action was taken on 04 Apr 2017.

The rating for MDY:821835006, ST Senior Unsecured, MTN, ZAR of Growthpoint Properties Limited was initially assigned on 11 May 2016 and the last Credit Rating Action was taken on 04 Apr 2017.

The rating for MDY:823165426, NSR LT Issuer Rating, ISSUER RATING, ZAR of Hyprop Investments Limited was initially assigned on 07 Jun 2012 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:823165426, NSR ST Issuer Rating, ISSUER RATING, ZAR of Hyprop Investments Limited was initially assigned on 07 Jun 2012 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:823165426, LT Issuer Rating, ISSUER RATING, ZAR of Hyprop Investments Limited was initially assigned on 11 May 2016 and the last Credit Rating Action was taken on 11 May 2016.

The rating for MDY:823165426, ST Issuer Rating, ISSUER RATING, ZAR of Hyprop Investments Limited was initially assigned on 11 May 2016 and the last Credit Rating Action was taken on 11 May 2016.

Only credit rating actions issued by Moody's Investors Service South Africa (Pty) Ltd are considered for the purpose of this disclosure.

Please see the ratings tab on the issuer page on www.moodys.com for additional rating history details. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Moody's considers a rated entity or its agent(s) to be participating when it maintains an overall relationship with Moody's. On this basis, these rated entities or their agent(s) are considered to be participating entities. The rated entities or their agent(s) generally provide Moody's with information for the purposes of their ratings process.

The main assumptions underlying the methodology used to determine the credit ratings for Bidvest Group Limited, The, Consolidated Infrastructure Group Limited, Telkom SA SOC Limited, Barloworld Limited, Fortress Income Fund Limited, Growthpoint Properties Limited and Hyprop Investments Limited are:

1) Expected future trends for the relevant industry(ies) structure, competitive dynamics, supply & demand, regulatory environment, and technology are assumed to be predictive for the likelihood of default and expected loss.

2) Expectations for competitive/market position and management's capabilities and approach to business and financial risks are assumed to be predictive for the likelihood of default and expected loss.

3) Indicators for profitability, interest coverage, and asset quality are assumed to be predictive for the likelihood of default and expected loss, and the rating category criteria are believed to be appropriate.

4) Indicators for cash flow generation, leverage, and debt coverage are assumed to be predictive for the likelihood of default and expected loss, and the rating category criteria are believed to be appropriate.

5) Expectations for legal, regulatory, liquidity, and financial market risks, mergers/acquisitions and recapitalization events, integrity of financial reporting, corporate governance, and the likelihood and nature of support or weakening influence from a parent, affiliate, government or financial party are assumed to be predictive for the likelihood of default/expected loss.

The main assumptions underlying the methodology used to determine the credit ratings for Kagiso Tiso Holdings Proprietary Limited are:

1) Expected future trends for the relevant industry(ies) structure, competitive dynamics, supply & demand, regulatory environment, and technology are assumed to be predictive for the likelihood of default and expected loss.

2) Expectations for competitive/market position and management's capabilities and approach to business and financial risks are assumed to be predictive for the likelihood of default and expected loss.

3) Indicators for profitability, interest coverage, and asset quality are assumed to be predictive for the likelihood of default and expected loss, and the rating category criteria are believed to be appropriate.

4) Indicators for cash flow generation, leverage, and debt coverage are assumed to be predictive for the likelihood of default and expected loss, and the rating category criteria are believed to be appropriate.

5) Expectations for legal, regulatory, liquidity, and financial market risks, mergers/acquisitions and recapitalization events, integrity of financial reporting, corporate governance, and the likelihood and nature of support or weakening influence from a parent, affiliate, government or financial party are assumed to be predictive for the likelihood of default/expected loss.

Information sources used to prepare the ratings are the following: parties involved in the rating, parties not involved in the rating, public information, and confidential and proprietary Moody's information.

Information types used to prepare the ratings for Bidvest Group Limited, The, Consolidated Infrastructure Group Limited, Telkom SA SOC Limited, Barloworld Limited, Fortress Income Fund Limited, Growthpoint Properties Limited and Hyprop Investments Limited include the following: Financial data, Operating data, Historical performance data, Public information, Moody's information, and Regulatory filing.

Information types used to prepare the ratings for Kagiso Tiso Holdings Proprietary Limited include the following: Financial data, Third party valuation data, Public information, and Moody's information.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable, including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process. The information available and considered in determining the credit rating is of appropriate quality relative to that available for similar obligors, securities or money market instruments.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating. Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

The ratings have been disclosed to the rated entities prior to public dissemination.

Credit ratings are Moody's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities rated by Moody's. Moody's defines credit risk as the risk that an entity may not meet its contractual, financial obligations as they come due and any estimated financial loss in the event of default. Credit ratings do not address any other risk, including but not limited to: market liquidity risk, market value risk, or price volatility. Credit ratings are not statements of current or historical fact. Credit ratings do not constitute investment or financial advice, and credit ratings are not recommendations to purchase, sell, or hold particular securities. Credit ratings do not comment on the suitability of an investment for any particular investor. Moody's issues its credit ratings with the expectation and understanding that each investor will make its own study and evaluation of each security that is under consideration for purchase, holding, or sale.

1) An entity's competitive position is expected to be stable over the 18 -- 24 month rating horizon and generally will not lead to rating volatility. Unexpected changes in technology, regulation, market participants or consumer preferences that negatively (or positively) impact an entity's competitive position within its market, may lead to multiple notch ratings changes during the course of the ratings horizon.

2) Operating strategy effectiveness is typically evidenced by an entity's performance metrics over the medium to long term, typically beyond the rating horizon, and generally will not lead to rating volatility. Changes in performance metrics during the 18-24 month rating horizon will not generally lead to high degrees of rating volatility (more than 1 rating notch). Sustained improvement or deterioration in performance metrics beyond Moody's expectations could lead to multi notch rating changes.

3) Rating levels are highly sensitive to financial strategy. Material changes to financial strategy which increase or decrease financial risk and liquidity may change the entity's ability to weather financial and business cycles. A change in appetite for financial risk may lead to multi-notch downward rating changes. Changes in financial strategy which reduce risk are likely to lead to single notch upward rating changes during the rating horizon.

4) Rating levels can be sensitive to changes in assumptions about an entity's financial position. Metrics that measure financial position tend to vary within a range of expected levels during the course of an 18 -- 24 month rating horizon, and modest variances are not expected to lead to multi-notch rating changes. Large, unexpected changes to assumptions regarding financial position, including measures related to financial leverage, liquidity, and resources available to meet financial obligations, may trigger multi-notch rating changes over the ratings horizon.

5) Rating levels can be greatly impacted by changes in governance structure. Corporate governance is expected to be stable during and beyond the rating horizon, and therefore not cause volatility in ratings. Material changes in governance, ownership structure, or support to or from other entities are likely to lead to multi notch rating changes.

The sensitivity to assumptions for the credit ratings for Bidvest Group Limited, The, Consolidated Infrastructure Group Limited, Telkom SA SOC Limited, Barloworld Limited, Fortress Income Fund Limited, Growthpoint Properties Limited and Hyprop Investments Limited are:

1) Moody's assumptions about the entity's competitive position within its business sector are presumed to remain stable over our rating horizon (18-24 months). Factors that can affect the entity's competitive position include changes in market share over time; disruptive pricing affecting either a) customer demand or b) the cost of supplying goods or services; new market entrants; barriers to entry of new competitors; or product substitution. If Moody's assumptions of competitive position are inaccurate, and the entity experiences forces which are expected to lead to sustained improvement or degradation in competitive position for the longer term, this may cause ratings to move upwards or downwards, depending on the speed of change and the entity's ability to react to the change.

As an example, ratings of a manufacturer of transportation equipment were lowered by multiple notches due to concerns about the ability to sell a newly developed airplane, which was a disruptive new entrant to the market. The downgrade reflected concerns about the financial stress that would result if the company failed to achieve its expectations for sales of the new aircraft.

Foreign exchange may impact competitive position by temporarily shifting cost and pricing advantages between competitors. For example, a US-based manufacturer of high-value durables produces its products entirely in the US, but sells its products globally. One of its primary competitors manufactures its products almost exclusively in Japan. A rise in the value of the dollar relative to the yen effectively lowers the production cost of the Japanese competitor, which may then lower prices to US consumers. The US manufacturer may choose to follow suit, or risk losing sales and market share. Either outcome, if sustained for a long period, would pressure credit ratings downward.

2) Moody's assumes that an entity's business profile, which incorporates its operating strategy, will evolve slowly, and is therefore unlikely to lead to rating changes over the 18 -- 24 month rating horizon. Business profile captures fundamental differences between entities in the same sector. An entity's overall business profile incorporates expectations of volatility in sales and earnings; the perceived strength of the entity's position in its market; and characteristics of its product offering, such as differentiation with competitive offerings and proven adoption by customers. Operating strategy encompasses decisions regarding the entity's supply chain and distribution channels; decisions regarding outsourcing production versus operating production facilities; directing growth capital towards acquisitions rather than internal development; or divesting a stable but mature business for one which is believed to offer greater future growth at the cost of higher near-term investment.

Ratings are sensitive to differences in business profile. For example, higher levels of product, segment or geographic diversification are generally a positive factor which is likely to reduce volatility in sales and earnings. The entity's degree of vertical integration has mixed considerations for ratings; vertical integration provides greater control over sourcing and distribution, but also creates a higher level of fixed costs which may be a burden during periods of cyclical declines.

An entity's business profile will change slowly, generally due to strategic decisions which are executed in the long term, and therefore will rarely be the source of short term rating changes. If there is an unexpected change in business profile, such as a decision to add or divest business segments or enter new markets within a short period of time, it could result in rating changes of one or more notches to reflect the new view of risk and opportunities over the rating horizon.

Multiple companies within an industry segment may shift their business profiles in response to a common set of external conditions that affects them all. An example is the strategic shifts undertaken by US defense contractors following a reduction in defense spending by the US government. Defense contractors, which provide highly specialized services to US agencies, faced revenue pressures when defense outlays were reduced. There were numerous mergers in the sector, as companies sought to broaden their offerings. Companies that merged generally took on higher debt, but their larger scale provided a competitive advantage against those competitors which maintained their existing profile. Generally, companies that merged experienced one to two notch downgrades at the time of the merger, reflecting higher financial leverage. Over the longer term, the merged companies have maintained more stable ratings profiles than their smaller competitors which could not compete as effectively.

3) Moody's ratings include assumptions about financial strategy and financial policy over the next 18 -- 24 months. Assumptions include management's appetite for debt incurrence and financial leverage; planning for debt maturities; management's decisions regarding deployment of capital; and deployment of profits (shareholder returns vs. investment in the business).

Examples of changes to financial policy may be in the form of a shift in dividend policy; a change in how to finance seasonal working capital or manage timing of payables; or decisions of how much cash to hold in reserves to soften the impact of business cycles.

Financial strategy is generally stable over the rating horizon. Unanticipated changes to a company's financial strategy, which may be accompanied by significant changes in financial leverage or capitalization, may lead to rating changes of one or more notches upwards or downwards.

Examples of financial policy changes which are common across all industry sectors include the decision to institute a large, one-time dividend or share repurchase program which could have a downward rating impact of one or more notches. A decision to reduce dividends can also have the effect of stabilizing ratings that might otherwise go down. A specific example is demonstrated by the change in financial strategy of a large conglomerate whose ratings reflected expectations that it would direct its high cash flow to debt repayments, steadily reducing leverage over time. The company unexpectedly announced a significant one-time share buyback, which caused a material increase in debt and financial leverage and pressured ratings downward.

A manufacturer of capital equipment had sustainably maintained leverage well below its publicly declared "ceiling" for a number of years. Ratings were upgraded by one notch based on Moody's determination that leverage levels were unlikely to rise in the foreseeable future. In an opposing example, a large conglomerate with traditionally conservative financial policies announced that it would embark on a long term program to make acquisitions and add leverage in a measured way over several years. Ratings were moved down based on the announcement of the new strategy, even though the impact on financial metrics was not expected to be seen until future periods. The entity was eventually downgraded by two notches in multiple steps, as its financial strategy was more clearly defined.

4) Moody's assumptions about this entity's governance structure within its market(s) are generally stable over our rating horizon (18-24 months).

Factors affecting governance include changes in ownership or control of the entity's operational and strategic decision making; support provided to, or received from, other corporate or government entities; the strength and independence of management; and participation in mergers, acquisitions or divestitures.

Changes to an entity's governance are rare but could result in multi-notch rating changes as it could positively or negatively impact the entity's future operating strategy and financial position.

For example, a large engine maker is controlled by its founding family and also has publicly listed stock. As a result of family control, the company has been somewhat insulated from the pressures of public shareholders, and has maintained comparatively low financial leverage and reinvested relatively large amounts of its high profits into very long term investments. Ratings would be pressured downwards if family control were diminished.

5) Moody's ratings include assumptions about this entity's financial position, as measured by financial metrics, over the next 18 -- 24 months. Assumptions include the entity's anticipated earnings levels, operating expenses, interest rates paid on debt, and cash flow generation, all of which contribute to an entity's financial metrics.

These measures may be impacted by unanticipated expenses, changes to interest rate levels, tax changes or business decisions that change expenditure or capital levels.

Modest changes to financial metrics over short periods are typical within most companies and industries. Ratings are not generally sensitive to modest changes in financial metrics which are due to expected business cycles or economic cycles and which are not seen as affecting an entity's long term viability or business profile. However, expectations that an entity's financial metrics are likely to change meaningfully (either positively or negatively) for a longer term could lead to rating changes of one or more notches upwards or downwards.

Examples that are common among all industries include one-time debt-funded share buybacks of significant size, which increase debt and cause leverage ratios to remain at higher levels than previously expected into the future. Rating downgrades of one or more notches are common in response to these scenarios.

The sensitivity to assumptions for the credit ratings for Kagiso Tiso Holdings Proprietary Limited are:

1) Moody's assumptions about the entity's competitive position within its business sector are presumed to remain stable over our rating horizon (18-24 months). Factors that can affect the entity's competitive position include changes in market share over time; disruptive pricing affecting either a) customer demand or b) the cost of supplying goods or services; new market entrants; barriers to entry of new competitors; or product substitution. If Moody's assumptions of competitive position are inaccurate, and the entity experiences forces which are expected to lead to sustained improvement or degradation in competitive position for the longer term, this may cause ratings to move upwards or downwards, depending on the speed of change and the entity's ability to react to the change.

Discovery of taint in food or consumer goods has caused rapid rating changes for individual entities and entire sectors. As an example, the discovery of mad cow disease in the US in 2003 caused a shutdown in worldwide export markets for US beef processors. Several companies in the sector were downgraded as a result of the expected impact of the disruption to their business. Similarly, discover of listeria or other taint in foodstuffs has resulted in downward ratings movement.

Over a 10-year period, the shift in sales of consumer electronics toward online channels resulted in a significant deterioration in sales at traditional "brick and mortar" retailers. A number of the latter experienced ratings downgrades due to their deteriorating competitive position, which was followed by a decline in their financial position.

Market share, a measure of competitive position, can change very quickly in apparel retailing. For example, a change in preference of women's apparel from high priced fashion styles to less-expensive, more fashion forward 'fast fashion' companies resulted in lower market share and significant financial weakness for retailers of higher priced fashion apparel, accompanied in some cases by rating downgrades. Beneficiaries of the trend included discount retailers, which enjoyed an enhanced credit profile.

A long term trend may change pricing dynamics for an entire industry segment, resulting in rating changes throughout the segment. For example, railroads invested significantly in improving the reliability of the entire network. As a result, the entire industry was able to increase prices in excess of operating costs, and to a level sufficient to cover the cost of invested capital. This ultimately resulted in a steady increase in profits and cash flow, which enabled declines in leverage and led to higher ratings for a number of companies in the sector.

2) Moody's assumes that an entity's business profile, which incorporates its operating strategy, will evolve slowly, and is therefore unlikely to lead to rating changes over the 18 -- 24 month rating horizon. Business profile captures fundamental differences between entities in the same sector. An entity's overall business profile incorporates expectations of volatility in sales and earnings; the perceived strength of the entity's position in its market; and characteristics of its product offering, such as differentiation with competitive offerings and proven adoption by customers. Operating strategy encompasses decisions regarding the entity's supply chain and distribution channels; decisions regarding outsourcing production versus operating production facilities; directing growth capital towards acquisitions rather than internal development; or divesting a stable but mature business for one which is believed to offer greater future growth at the cost of higher near-term investment.

Ratings are sensitive to differences in business profile. For example, higher levels of product, segment or geographic diversification are generally a positive factor which is likely to reduce volatility in sales and earnings. The entity's degree of vertical integration has mixed considerations for ratings; vertical integration provides greater control over sourcing and distribution, but also creates a higher level of fixed costs which may be a burden during periods of cyclical declines.

An entity's business profile will change slowly, generally due to strategic decisions which are executed in the long term, and therefore will rarely be the source of short term rating changes. If there is an unexpected change in business profile, such as a decision to add or divest business segments or enter new markets within a short period of time, it could result in rating changes of one or more notches to reflect the new view of risk and opportunities over the rating horizon.

A change in business profile can happen rapidly with certain new product introductions. For example, a pharmaceutical company receives regulatory approval for a drug that treats a given disease, and which is seen a significantly more effective than existing drugs on the market. The business profile of company with new drug is greatly, and quickly, enhanced, creating positive rating momentum. Meanwhile, the business profile for the producer of the older drug declines, which would be expected to lead to downward rating momentum over the medium to longer term in the absence of other changes to its business structure or product line.

In another example, a restaurant company with multiple brands decided to spin-off a sizable restaurant concept. This meaningfully reduced its brand diversification and resulted in a ratings downgrade.

Longer term operating strategy impact is demonstrated by the ratings downgrades experienced by several US department store operators. Over a period of years, these companies were unable to adjust to changing consumer preferences towards different types of venues and product assortments. Sales declined meaningfully bringing down operating expectations. The companies experienced multi-notch downgrades due to declines in operating expectations over the longer term.

3) Moody's ratings include assumptions about financial strategy and financial policy over the next 18 -- 24 months. Assumptions include management's appetite for debt incurrence and financial leverage; planning for debt maturities; management's decisions regarding deployment of capital; and deployment of profits (shareholder returns vs. investment in the business).

Examples of changes to financial policy may be in the form of a shift in dividend policy; a change in how to finance seasonal working capital or manage timing of payables; or decisions of how much cash to hold in reserves to soften the impact of business cycles.

Financial strategy is generally stable over the rating horizon. Unanticipated changes to a company's financial strategy, which may be accompanied by significant changes in financial leverage or capitalization, may lead to rating changes of one or more notches upwards or downwards.

Examples of financial policy changes which are common across all industry sectors include the decision to institute a large, one-time dividend or share repurchase program which could have a downward rating impact of one or more notches. A decision to reduce dividends can also have the effect of stabilizing ratings that might otherwise go down. In a specific example, a large operator of chain restaurants decided to return a sizable amount of cash to its shareholders through debt-financed share repurchases, while targeting to maintain significantly higher leverage than in the past. A multi-notch ratings downgrade followed the announcement.

Another example of financial strategy is the "rent vs. own" decision with regards to real estate made by brick and mortar retailers. Ownership of property generally lowers costs and creates financial value which helps maintain ratings through cyclical declines which might otherwise cause ratings to fall. This strategy may be insufficient to maintain ratings in the long term if a company is unable to respond to other changes in the market over a longer term. One well established electronics retailer experienced multiple ratings downgrades, and ultimately went bankrupt, despite its financial resources and relatively low-cost store base. Those strengths were not sufficient to overcome a long term decline in its sales when the company failed to develop a meaningful internet-based presence.

An example of a positive rating change occurred when a media company's new owner committed to a less aggressive growth policy, which was expected to retain cash within the company and ultimately lead to stable or reduced leverage.

4) Moody's assumptions about this entity's governance structure within its market(s) are generally stable over our rating horizon (18-24 months).

Factors affecting governance include changes in ownership or control of the entity's operational and strategic decision making; support provided to, or received from, other corporate or government entities; the strength and independence of management; and participation in mergers, acquisitions or divestitures.

Changes to an entity's governance are rare but could result in multi-notch rating changes as it could positively or negatively impact the entity's future operating strategy and financial position.

Governance changes are common at the time of a sale or leveraged buy-out of a company, due to a change in financial policies which are expected to be adopted by the new owners. For example, expectations are that a sale to a financial buyer will be accompanied by financial policies which are associated with a higher risk profile. These types of transactions generally result in ratings being lowered by multiple notches at the time of the transaction. Conversely, a sale to a buyer (either company or investor) or an initial public offering of stock is associated with more benign financial policies, and may lead to an upgrade of one or more notches at the time of the sale.

In a specific example, the general membership of a large agricultural cooperative dismissed its entire board of directors and attempted to sell the Coop's business and brands to another industry player. Ratings were placed under review repeatedly as events developed, and ratings were lowered by two notches during a one-year period.

5) Moody's ratings include assumptions about this entity's financial position, as measured by financial metrics, over the next 18 -- 24 months. Assumptions include the entity's anticipated earnings levels, operating expenses, interest rates paid on debt, and cash flow generation, all of which contribute to an entity's financial metrics.

These measures may be impacted by unanticipated expenses, changes to interest rate levels, tax changes or business decisions that change expenditure or capital levels.

Modest changes to financial metrics over short periods are typical within most companies and industries. Ratings are not generally sensitive to modest changes in financial metrics which are due to expected business cycles or economic cycles and which are not seen as affecting an entity's long term viability or business profile. However, expectations that an entity's financial metrics are likely to change meaningfully (either positively or negatively) for a longer term could lead to rating changes of one or more notches upwards or downwards.

Examples that are common among all industries include one-time debt-funded share buybacks of significant size, which increase debt and cause leverage ratios to remain at higher levels than previously expected into the future. Rating downgrades of one or more notches are common in response to these scenarios.

Please see Moody's Rating Symbols and Definitions on the Ratings Definitions page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Moody's credit ratings are opinions of the relative credit risk of financial obligations translating into an ordinal ranking of issuers and financial obligations across asset classes and geographies. As such, no absolute probability of default nor expected loss given default is assigned to each individual credit rating. Please refer to the following link for an index of Moody's default studies. Guides to Moody's Default Research.

Please see Moody's Rating Symbols and Definitions on the Ratings Definitions page on www.moodys.com for further information on the time horizon in which a credit rating action may be expected after a review or outlook action took place.

I hereby attest, as a person with responsibility for these Credit Rating Actions, that to the best of my knowledge, based on (i) my participation in the rating committee that determined to take these Credit Rating Actions, (ii) any materials I have reviewed in connection with the rating committee, and (iii) the attestations I have received from other members of the rating committee:

1) No part of these Credit Rating Actions were influenced by any other business activities of Moody's Corporation-- i.e., this Credit Rating Action was not affected by the existence of, or potential for, other business relationships between Moody's Investors Service or its affiliates and the Rated Entity or its affiliates, or the non-existence of any such relationships;

2) These Credit Rating Actions were based solely on the merits of the obligor(s), security(ies) or instrument(s) being rated; and

3) These Credit Rating Actions were an independent evaluation of the credit risk of the obligor(s), security(ies), or instrument(s) assessed in these Credit Rating Actions and is subject to the potential limitations of the Credit Ratings disclosed with these Credit Rating Actions.

David Staples, MD-Corporate Finance

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Dion Bate
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service South Africa (Pty) Ltd.
The Forum
2 Maude Street
2196 Sandton
Johannesburg
South Africa
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

David G. Staples
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service South Africa (Pty) Ltd.
The Forum
2 Maude Street
2196 Sandton
Johannesburg
South Africa
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

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