Reserve Bank warns of tougher times ahead
Financial Stability Review warns a deteriorating economic outlook and greater political risk have put SA’s sovereign credit ratings under pressure
SA was at high risk of further credit rating downgrades which would affect the stability of the domestic economy, the Reserve Bank warned on Tuesday. Despite credit-ratings downgrades from S&P Global and Fitch, foreign investors were still buying domestic bonds. But further downgrades on the local currency rating could trigger a mass exodus of these investors and cause the rand to plummet, said the Bank. According to the first edition of the Bank’s Financial Stability Review published on Tuesday, a deteriorating economic outlook and greater political risk have placed SA’s sovereign credit ratings for foreign and local currency under pressure. In April, S&P Global Ratings cut South African foreign debt to subinvestment grade, while Fitch downgraded both the foreign and local currency debt to "junk" status. Moody’s has put SA on a 90-day review for a downgrade. Reserve Bank governor Lesetja Kganyago said that with Moody’s placing SA on watch for a credit downgrade "Once again Team SA ...
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