on borrowed time
What if SA is cut to junk?
SA is on the verge of being junked by Moody’s. The severity of the pain such a move will cause depends on various factors, including the degree to which a downgrade is already priced into the markets
A year ago, after President Cyril Ramaphosa’s first state of the nation address, ratings agency Moody’s upgraded SA’s credit outlook from "negative" to "stable", and suggested the country may enter a virtuous cycle of economic growth, fiscal prudence and mounting social cohesion. Both Fitch and S&P Global Ratings had junked SA’s rating in the first week of April 2017, immediately after the axing of former finance minister Pravin Gordhan, but Moody’s has kept SA’s ratings on the last rung of the investment-grade ladder all along. This follows an established pattern: Moody’s has been inclined to give the country the benefit of the doubt despite repeated fiscal and growth disappointments. In November 2017, S&P kicked SA deeper into junk territory after former finance minister Malusi Gigaba’s disastrous medium-term budget policy statement, but Moody’s put SA on a 90-day review to first assess the outcome of the ANC’s December elective congress. When Ramaphosa was elected, Moody’s patien...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.