S&P blames Zuma as it wields the axe
The ratings agency cuts SA’s foreign currency rating to 'junk' status, while the negative outlook suggests another downgrade
Last week’s shock cabinet reshuffle has tipped SA over the edge of the investment-grade cliff, with ratings agency S&P Global Ratings downgrading SA’s foreign currency rating to subinvestment grade, or "junk" status, on Monday evening, sending markets into a tailspin. The ratings agency, whose next ratings review had been due only in June, departed from its schedule to do the downgrade, saying the executive changes initiated by President Jacob Zuma had put at risk the country’s fiscal and growth outcomes, increasing the risk of policy shifts that could be negative for economic growth and fiscal discipline. S&P also put a negative outlook on the new BB+ rating, suggesting a further downgrade could be on the cards if it sees deterioration in SA’s economic or fiscal performance. The rand lost almost 3% within half an hour of S&P’s announcement. The downgrade will make it more expensive for the government, state-owned enterprises and the private sector to borrow on international markets...
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