South Africa is preparing itself for the possibility that Moody’s may downgrade the country’s sovereign credit rating to sub-investment grade.
Moody’s is currently the only major ratings agency that has South Africa at investment grade – one notch above junk – with a stable outlook.
The country has been rated below investment grade since 2017 by ratings agencies Standard & Poor and Fitch.
Should the agency also downgrade South Africa to junk status, the country would no longer be eligible for inclusion in debt gauges such as Citigroup Inc’s World Government Bond Index (WGBI).
A downgrade may also have an effect on the rand, says chief trader at Standard Bank Warrick Butler, who was speaking in an interview with Reuters.
“A downgrade by Moody’s, which is considered highly unlikely by most commentators, will push the rand back into the R15-area and maybe even R16 depending on market positioning,” he said.
“While another stay and
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