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Cabinet Shake Up Sees S&P Downgrade SA Credit Rating


S&P Declare SA Sovereign Credit Rating To Be Junk

The excitement of the midnight political reshuffling of Cabinet at the beginning of April has only just begun, as S&P Global Ratings Agency also held an emergency meeting and decided to drop SA’s Sovereign credit rating from already very low to “junk” status.

Why Junk?

rubish binS&P explain that this is because the changes show the split within the ruling party and feel that policy change is imminent. They feel that these changes will lessen the chance of the country fulfilling it’s debt obligations. The official term for the rating is BBB- but is commonly called “Junk”. The Rand felt the effects with a 3% loss in value vs the US Dollar.

 

Does Everyone Think It Is Junk?

Economists predict that most rating agencies (like Moodys and Fitch) will follow suit and downgrade the credit rating significantly in the near future. Think of these companies as the world wide credit bureaus. They say how likely you are to repay your debt. Moody’s will release their rating later this week.

 

 

 

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