Triple junk ‘may hurt savings’
More credit rating downgrades could squeeze bonds and shares and devalue investments, says industry body
A downgrade of SA’s credit rating to junk status by all three major ratings agencies could put downward pressure on bonds and JSE-listed shares, which would lead to a drop in the value of South Africans’ investments, says an industry body. Foreign investors including pension funds, had about R2-trillion invested in the JSE and R1-trillion in government debt, said Leon Campher, CEO of the Association for Savings and Investment SA. He said there was R9-trillion in domestic regulated savings pools. About R1.4-trillion of this was invested in government bonds and R5-trillion in shares, primarily listed equity. Were Fitch or Moody’s to follow S&P Global Ratings in downgrading the country’s foreign-currency credit rating to subinvestment grade, some international investors including pension funds, would become forced sellers of the country’s bonds and equities if their mandates obliged them to hold assets in countries with investment-grade credit ratings. This could result in money flowin...
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