Fitch Downgrades SA Again
Fitch Rating Agency Drops SA Rating Again
About 3 years ago Fitch Rating Agency downgraded SA into the “junk” status telling cautious investors to beware. This rating was recently also agreed to by rating agency Moody’s. Now, in the midst of the Covid-19 Pandemic, Fitch is having to reevaluate ratings for markets and countries world wide. They have been slashing ratings across the board as they anticipate massive issues as a result of the Covid-19 national lockdown and economic slowdown.
Some rather nervous experts are predicting a near total market collapse and global recession which will see hundreds of millions of people lose their jobs and end up destitute. Already in the USA retrenchment have hit the working population in waves over the last few weeks.
‘Government is already struggling to keep up with debt repayments and care for the needs of citizens’
During such a time, even well known local brands like Edcon and Forchini are in a world of trouble and could potentially be entering business rescue or even face liquidation. Woolworths are predicting a 20% profit fall in the months ahead. The global pandemic will place strain on countries like SA where the Government is already struggling to keep up with debt repayments and care for the needs of citizens and will now need to find money somewhere to fight the disease and its effects.
Add to that the ongoing issues with the looted Eskom and other state agencies and you have a pretty negative economic picture. This is what Fitch are now saying.
As a result, Fitch are lowering ratings to a negative outlook for most countries (not just SA) in the face of what it is calling this ‘global shock‘. The markets reacted to the Fitch rating with the Rand dropping to a new all time low below R19 to the US Dollar. It is estimated that this will continue to drop to around R20/$ in the near future.