SA holds breath as S&P rating announcement nears
S&P Global warned earlier this year that political divisions and problems with state-owned entities needed to be addressed.
JOHANNESBURG - Ratings agency S&P Global is expected to announce on Friday evening whether South Africa has cleared the last economic hurdle of the year or whether the country has been downgraded to junk status.
The agency rates South Africa at BBB- with a negative outlook, one notch above sub-investment grade.
It warned earlier this year that political divisions and problems with state-owned entities needed to be addressed.
Economists are collectively holding their breath with many warning that a downgrade could have serious consequences for the repayment of debt.
A week ago, Moody’s and Fitch kept their ratings unchanged, with Fitch changing its outlook to negative.
They cited political instability, unemployment and concern over government expenditure.
Concerns were also raised in a number of quarters after deep divisions emerged at the African National Congress’ NEC meeting earlier this week, with a number of members calling for President Jacob Zuma to step down.
Treasury warned in November that its borrowing costs could double or triple if it falls into sub-investment grade.
The rand has weakened slightly on Friday with economists worried that the local currency will lose substantial ground if the country is downgraded.
(Edited by Winnie Theletsane)