Banks acknowledge their ratings have fallen along with the sovereign
The downgrade in local banks’ ratings was expected after S&P’s decision, but the JSE’s banking index lost another 3% on Thursday morning
Banks issued statements on Thursday acknowledging that S&P Global Ratings had cut their counter-party credit ratings to BB+ from BBB- to keep them inline with SA’s country rating. Although expected, the JSE’s banking index slid a further 3% on Thursday morning. "SA’s sovereign credit ratings are automatically reflected in the credit ratings of South African banks. Given this, South African bank ratings, including Nedbank’s, were placed under ratings review by Moody’s and lowered in line with the sovereign rating by Standard & Poor’s," Nedbank said in a statement on Thursday morning. Nedbank’s share price fell 2.4% to R223.50 after the announcement. Because the ceiling on their credit rating is set by the rating of the country they are domiciled in, multinationals tend to select AAA rated countries as their homes. This is the reason many London-based companies are moving their head offices to Frankfurt or Paris after the UK’s credit rating was cut to AA after Brexit. "Due to the inte...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.