The Treasury is hopeful that Moody’s Investors Service will not downgrade SA’s sovereign credit rating to junk status when it announces its decision at the end of the month. A downgrade to sub-investment grade would automatically mean SA being removed from the Citigroup World Government Bond Index. This would force asset managers to sell SA bonds worth billions of rand. Moody’s was the only major ratings agency not to downgrade SA sovereign debt to junk status in 2017. It is currently rated at Baa3, the lowest investment grade. S&P and Fitch have already downgraded SA to junk status. A Moody’s downgrade would also weigh on growth, with the Treasury factoring in a contraction of 1.2% for 2019, as opposed to a growth forecast of 1.5%, should a downgrade take place, said Duncan Pieterse, acting director-general of economic policy. A further contraction of 0.2% in 2020 is expected in such a scenario, he said. Prolonged and constant load-shedding by Eskom would result in a forecast growt...

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