ALL EYES ON S&P
Markets expect a one-notch downgrade
S&P Global, due to pronounce on SA’s ratings on Friday, poses the highest risk of the three major ratings agencies
Markets have priced in a one-notch downgrade of SA’s ratings by S&P Global Ratings — but will be watching out for the danger of a "ratings meltdown", if there is even a hint of more than one downgrade. S&P, which is due to pronounce on SA’s ratings on Friday evening, poses the highest risk of the three major ratings agencies because it has SA just one notch above subinvestment grade ("junk status") and on negative outlook. But even if it opts for a downgrade, what will matter is whether it changes its outlook from negative to stable, indicating it is not looking at any further downgrades. Old Mutual economist Rian le Roux said the market had not priced in more than a one-notch downgrade, and the big danger was of a "meltdown" involving successive downgrades. But after Moody’s held back from taking any action on SA’s ratings last week, and Fitch changed its outlook from stable to negative, many economists now expect that S&P might grant SA another reprieve and leave the foreign curre...
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