Eskom and other state-owned companies played the biggest part in S&P downgrade
Two of the three big global ratings agencies have now given a junk rating to rand-denominated government bonds
SA’s credit rating is now officially junk thanks to the poor balance sheets of Eskom and other state-owned companies. S&P Global Ratings downgraded South African rand-denominated government bonds to BB+ from BBB-on Friday night. This followed repeated warnings by the ratings agency that the government standing R350bn surety for the state-owned power utility’s spiraling debt was unsustainable. "Over the next six months, we anticipate that appropriations may be required to shore up Eskom’s very weak financial position. Eskom already benefits from government guarantees of nearly 8% of GDP," it said on Friday. It estimated overall public sector debt at 71% of GDP in 2017. S&P’s move places its credit rating of SA’s local currency debt on the same level as Fitch’s, meaning two of the three big global ratings agencies have given a junk rating to rand-denominated government bonds. Reserve Bank governor Lesetja Kganyago recently warned that a consensus view by credit rating agencies that SA...
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