How bad will the Cyber Monday sale of local government bonds be now that two of the big-three credit rating agencies rate rand-denominated government bonds as junk?At 7am on Monday morning, the rand had recovered slightly from the knee-jerk reactions of a 3% plunge against the euro and 2% plunge against the dollar and pound following the announcement at 11pm on Friday from S&P Global Ratings that it was downgrading SA’s local-currency bonds to the first tier of junk and foreign-currency bonds into the second tier.At the same time, Moody’s issued a credit report saying it would wait to see the government’s Budget in February before deciding whether to join S&P and Fitch in cutting SA’s credit rating to junk.It now remains to be seen which indices drop rand-denominated bonds, which the Treasury said represented about 90% of South African government debt.Reserve Bank governor Lesetja Kganyago recently warned SA that falling out of the indices that exclude junk bonds could result in tra...
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