SA’s sovereign credit rating downgraded to junk status
S&P says last week’s reshuffle poses a risk to fiscal policy
S&P Global Ratings cut SA’s sovereign credit rating to junk status on Monday following an emergency meeting over the weekend. The ratings agency decided the economic crises President Jacob Zuma plunged the country into with his midnight cabinet reshuffle on March 31 was too severe to wait until June 2 for its next scheduled review of SA’s sovereign rating. S&P also said the reshuffle posed a risk to fiscal policy. Zuma’s firing of finance minister Pravin Gordhan and his deputy Mcebisi Jonas saw the yields on the government’s benchmark 10-year R186 bonds surge from 8.355% to 8.84% on Monday. “The downgrade reflects our view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, have put policy continuity at risk,” S&P said. “This has increased the likelihood that economic growth and fiscal outcomes could suffer.” S&P reduced SA’s credit rating one notch to BB+ from BBB- on Monday, placing the country’s bonds...
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