Initial short-term losses in the currency and bond markets in the event of a sovereign credit rating downgrade will not destabilise the country’s domestic financial markets, the Reserve Bank says. SA is included in various global bond indices such as the Citibank World Government Bond index, JP Morgan Bond indices and the Barclays Global Aggregrate index. Global fund managers benchmark their portfolios against these indices. Reserve Bank governor Lesetja Kganyago said "based on the exclusion criteria of the various global bond indices in which SA is included, a downgrade to subinvestment grade does not pose a short-to medium-term risk of SA being removed from any of the global indices". According to the second edition of the Reserve Bank’s Financial Stability Review published on Thursday, for SA to be excluded from the world government bond index would require double downgrades from Moody’s and Fitch ratings agencies and a triple downgrade from S&P Global Ratings. All three ratings ...
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