SA will probably have its sovereign credit rating cut to junk by two of the big three ratings agencies in coming days — perhaps as soon as Monday by S&P Global Ratings. S&P, which was only scheduled to review SA’ s credit rating on June 2, reportedly had an emergency meeting at the weekend following President Jacob Zuma’s firing of finance minister Pravin Gordhan and his deputy Mcebisi Jonas at midnight last Thursday. According to a research note from Barclays, a cut to junk for SA would result in forced selling by institutions whose mandates do not permit them to hold "sub-investment grade" bonds of at least $500m in dollar-denominated debt. "We think it is very likely that all the agencies will downgrade the sovereign credit rating by one notch each," RMB currency strategist John Cairns warned in a note e-mailed on Friday. SA has an "edge of junk" rating of BBB- from S&P and Fitch, and a Baa2 from Moody’s, which is equivalent to BBB in S&P’s and Fitch’s nomenclature. "This means t...
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