SA and its neighbours in sub-Saharan Africa might struggle to borrow just as most of the region’s international debt matured in the next decade, international ratings agency Moody’s Investors Service cautioned in a report on Tuesday. This comes as the Reserve Bank’s monetary policy committee is expected to keep interest rates unchanged on Thursday ahead of potential ratings action by S&P Global Ratings and Moody’s on Friday. S&P is widely expected to downgrade SA’s local currency debt rating to junk, leading to much higher borrowing costs. Over the next three years SA’s gross borrowing requirement will be nearly R1-trillion, the Treasury said in the medium-term budget statement. Stanlib chief economist Kevin Lings said on Tuesday a downgrade could result in the benchmark 10-year bond yield initially weakening an additional 50-70 basis points. But investors could find value at these levels, which would offer some recovery.
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