Ratings Agencies Hold Off on Further Downgrade
Ratings agencies Standard & Poor’s and Fitch have both held off on lowering SA’s long-term foreign and local currency issuer default rating any further.
It can basically be summed up this way:
Foreign Currency Rating: Still Junk (nothing changed since the recent downgrade)
Local Currency Rating: Not Quite Junk (but close and may drop if political situation deteriorates)
There are a number of reasons for this including the way government has not yet made any significant changes to policy despite the sudden replacement of top Ministers in the midnight Cabinet switch. At present, both of these ratings agencies see things as “stable” but warn that they may drop their ratings dependant on what happens next. They are both not very optimistic however based on the poor economic growth they are seeing.
Moody’s the other ratings agency has been warning that a downgrade may come from their side any moment now. In fact, it is likely. A big factor will be what they decide the outlook is, as their ratings also come with a positive, stable or negative prediction.