STATE CAPTURE
Institutional strength staved off junk status downgrade by ratings agencies
The government will be watched intently in the next year for efforts to fulfil promises of bringing about reforms, writes Hilary Joffe
December is a tense time for the South African economy. Fifteen years ago it was the month the rand crashed. A year ago, almost to the day, it was the month market mayhem broke out when former finance minister Nhlanhla Nene was fired, a shock that came just days after negative rating actions by S&P Global and Fitch. This time, we were waiting for December to see whether S&P would act on its negative outlook and become the first of the major agencies to take SA’s rating down to subinvestment grade, "junk" status. In the event, it did not. The only one of the three majors that took action was Fitch, which like S&P has SA rated on the edge of investment grade and has now put the outlook on negative. SA is now on watch for a downgrade at all three agencies. The question is what chance we have of scraping through to next December with all three investment grade ratings still intact. Sizing that up requires a look at why the ratings agencies held off this time, and what signals they have ...
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