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Some experts warn of possible downgrade by S&P

SA has been trying to avert a sovereign rating downgrade to junk status that would raise borrowing costs.

Standard and Poor's rating services logo. Picture: Supplied

CAPE TOWN – Some experts have warned South Africa may not be as lucky to avoid a downgrade by Standard & Poor’s Global this week.

The country has been trying to avert a sovereign rating downgrade to junk status that would raise borrowing costs.

Moody’s kept South Africa’s rating unchanged at two notches above sub-investment grade with a negative outlook on Friday.

At the same time Fitch, which has the country one level above junk, changed its outlook from stable to negative.

Economist, Christie Viljoen, says Standard & Poor’s Global will take into account what the country has done over the past six months.

“They’ve seen that the South African economy and the political situation has deteriorated. There’ll be some forward looking and they will have to review all of this, working it into the next two or three year’s scenario.

“However, I think S&P will be disappointed and we’ll most likely be seeing a downgrade from them on Friday.”

Last week, Treasury said it was pleased South Africa has been able to preserve its investment grade rating after decisions by Moody’s and Fitch to keep it unchanged.

It has welcomed a decision by Fitch’s to revise its outlook for South Africa to negative, with the rating unchanged at BBB minus.

Fitch has listed a number of issues including increasing political risk, standards of governance and policy-making as factors in its decision.

Moody’s has also kept its rating unchanged with a negative outlook.

(Edited by Leeto M Khoza)