SA is one of 30 countries that have entered the new year with a negative outlook on their sovereign credit rating from S&P Global Ratings.

With just seven nations on positive outlooks, the ratings agency expects downgrades to outstrip upgrades in the next 12 months.

Since the global financial crisis, the average long-term sovereign credit rating has fallen by just more than one notch to between BBB-and BBB, S&P said in a report on global sovereign rating trends.

Outlooks indicate the potential direction — up or down — of a credit rating.

The ratio of negative outlooks to positive outlooks is about 4:1, while only 52% of all 130 sovereigns rated by S&P have an investment-grade rating (BBB-and above).

 "This ratio remains at the lowest level it has ever been," S&P MD and chief rating officer of sovereign ratings Moritz Kraemer said. The decline in the average sovereign rating was due to deteriorating credit quality, as well as "fallen angels", such as Azerbaijan, Bahamas or Bahrain, which had slipped from investment grade to speculative grade in 2016, Kraemer said.

That a large number of the new sovereign ratings had been assigned to developing economies and were in the lower rating categories also brought down the average, Kraemer said.

A B rating — a speculative or subinvestment grade— has been given to 37 sovereigns. This group had remained the largest over the past decade, S&P said.

The number of AAA-rated sovereigns, the highest rating, had fallen from a high of 19 in December 2010 to 12 at the end of 2016.

This was due to downgrades in the eurozone; the downgrade of the US, a large economy, to AA+ in August 2011; and the two-notch downgrade of the UK, following the Brexit referendum in June 2016, to AA.

"Since mid-2008, sovereign downgrades have generally outnumbered upgrades," Kraemer said. The number of negative outlooks relative to positive outlooks suggested this trend will continue in the coming year.

Latin America had the largest number of negative outlooks among its sovereigns (12), followed by Africa (6) and Asia-Pacific (5).

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