BONGIWE KUNENE: Credit ratings downgrade percolates through to equal hit to banks
Institutions are dependent on the health of the economy and are among the largest holders of sovereign bonds
The credit ratings of SA banks will be downgraded after the decision by three investor services agencies to downgrade the country’s credit risk rating. As banks depend on the health of the economy as a whole for sustainable business and are among the largest holders of sovereign bonds, their credit ratings are never higher than that of their country.
The world’s most important credit ratings agencies have said the outlook is that SA will be unable to afford its debt; and it is unlikely that the government will be able to avoid the crisis by implementing its elaborate plans to revive the economy — including cutting spending and carrying out vital economic reforms — mainly due to a lack of political will...
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