The government's debt costs have risen ahead of Moody's ratings action this week, suggesting that the bond market has already priced in a credit rating downgrade to junk status, economists said. Dave Mohr, chief investment strategist, and Izak Odendaal, investment strategist, both at Old Mutual Multi-Managers, said in a research note on Wednesday that the government's 10-year borrowing cost was 9% and the borrowing cost for households - the prime overdraft rate - at 10.25%, was more than twice nominal national income growth. "Although there is a risk of SA losing its final investment grade rating [from Moody's], the elevated yield suggests we are very much priced in as junk status," they said. PODCAST: Listen to more commentary on the topic. Subscribe: | Spotify | Apple Podcasts | Pocket Casts | Moody's is the only ratings agency that has SA on investment grade. A downgrade could trigger SA's exit from several major indices, including the World Government Bond Inde...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, Morningstar financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.

Questions or problems? Email or call 0860 52 52 00.