EDITORIAL: Ratings danger is still present
S&P is the big one to watch because it has SA’s foreign currency rating at BBB-, just one notch above subinvestment grade, 'junk'
Ratings agency S&P Global’s annual credit conference in Johannesburg this week came as a timely reminder that SA is still in danger of a downgrade of its sovereign rating to junk status — and that the clock is ticking. S&P is the big one to watch because it has SA’s foreign currency rating at BBB-(triple B minus), just one notch above subinvestment grade, or "junk" status, and has had the rating on negative outlook since December 2015. As South African sovereign analyst Gardner Rusike said this week, the agency generally tried to resolve a negative outlook within two years, which would give us a window until December 2017. That means S&P will be looking to act at its June or end-November update, either by taking SA down to junk or by returning its rating to stable. The other ratings agencies pose less of an immediate risk. Moody’s still has SA two notches above subinvestment grade and though Fitch’s rating is the same as S&P’s, Fitch put SA on negative outlook only in December, so i...
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