Outflow of up to R100 billion possible if SA is downgraded
'Should both companies cut, rand debt would fall out of gauges including Citigroup Inc.’s World Government Bond Index, sparking outflows of 80 billion to 100 billion rand'
South Africa will confront the threat of a $7 billion debt selloff this week as it awaits two concurrent judgments on its credit status. Opinion among economists is divided as to how stark a danger that is. Fifty-six percent of respondents in a Bloomberg survey said S&P Ratings will reduce its assessment to the highest non-investment grade on Friday. Moody’s Investors Service, which is scheduled to make a decision, will likely leave it unchanged, according to three-quarters of those asked. The sustainability of the nation’s debt will be at risk unless government presents a credible fiscal-consolidation plan in 2018, Moody’s said after the mid-term budget last month. While the outcome of the ruling African National Congress’s elective conference next month will be of interest to ratings companies, it’s the February budget that they’ll be watching for clues on the country’s debt direction, said Annabel Bishop, the chief economist at Investec Bank Ltd. Fiscal Detail“The budget will pro...
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