Treasury spells out effects of ratings downgrade on state-owned entities’ debt
If SA’s sovereign rating is downgrade, state-owned companies will need extra loan guarantees and cash injections, says top Treasury official Michael Sachs
State-owned companies had R165bn in debt linked to SA’s sovereign rating, and R10.6bn of this would need additional guarantees and/or cash injections if SA’s rating is downgraded to subinvestment grade. That is what the head of the the Treasury budget office Michael Sachs said on Friday in a presentation to parliament’s two finance committees on Treasury’s response to public hearings on the medium-term budget policy statement. Credit ratings agency Standard and Poor’s is currently engaged in reassessing its rating of SA and is due to announce the result early next month. Low economic growth, lack of structural reform and lack of progress in the governance of state-owned companies are flagged as risks to the current rating. A deterioration in balance sheets of state-owned companies was one of the possible spillover effects of a credit ratings downgrade, Sachs said. "A sovereign ratings downgrade would likely be followed by rating downgrades of most state owned companies (which) are h...
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