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Moody's credit ratings downgrade no surprise, says analyst

Last Friday, Moody's joined the other two major ratings agencies in downgrading South Africa's sovereign credit rating to junk status.

Moody's Investors Service. Picture: Facebook.

CAPE TOWN - A credit ratings downgrade was expected, says a financial analyst.

Last Friday, Moody's joined the other two major ratings agencies in downgrading South Africa's sovereign credit rating to junk status.

It said the main driver behind the downgrade was the continuing deterioration in fiscal strength and structurally very weak growth.

Moody's said the rapid spread of COVID-19 would exacerbate the country's economic and fiscal challenges and would complicate the emergence of effective policy responses.

The head of personal investments at Coronation Pieter Koekemoer said the downgrade came as no surprise.

"The way that we need to think about the downgrade is it is an inevitable consequence of what has happened over the last decade and while it's easy to become emotional about it now, we should not be surprised as it is something that in the markets, everyone has been expecting for the last six to nine months.

"They believe that there isn't enough evidence yet that South Africa as a country is introducing the necessary steps and tools to get the economy going."

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