RATINGS
HILARY JOFFE: Junk-grade movie to unfold in slow motion with more drama in the mix
Downgrade has direct effect on how much it costs government and other public and private entities to borrow
Finally, SA fell off the investment-grade cliff into junk territory. Yet by Friday, when Fitch became the last of the three ratings agencies to pronounce, junking the ratings on the country’s rand-denominated debt and its hard-currency debt, the rand and bond yields hardly responded. In part, that was because they had already tanked over the previous two weeks in response to the cabinet reshuffle to which the ratings agencies were responding, with the rand now about 10% lower than it was before the shock road-show recall on the Monday before the reshuffle. It was also partly because the world is so enamoured with emerging markets even a downgrade did not dent SA as much as it might have. And to a greater or lesser extent, the downgrade has been priced into financial markets for at least the past year.But the real reason is that this ratings movie will play out in slow motion, not all at once. That applies as much, if not more, to the real economy as it does to financial markets, whi...
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