S&P leaves South Africa on a Downgrade due to political uncertainty and weak economic growth
Standard & Poors (S&P) Global Ratings Agency affirmed South Africa’s “junk” grade foreign currency debt rating and retained a negative outlook, based on weak economic growth and political uncertainty continued to pose risks to the rating.
S&P cut South Africa’s foreign currency debt to BB+, its highest speculative-grade rating, in April after respected finance minister Pravin Gordhan was sacked.
“The negative outlook on the foreign and local currency ratings reflects our view that political risks will remain elevated this year, which could undermine economic growth and fiscal outcomes more than we currently project,” S&P said.
The rating agency also affirmed South Africa’s local currency debt ratings at BBB-, the lowest investment-grade rating, with a negative outlook.
Rival Fitch also downgraded South Africa to sub-investment grade for both foreign and local currency debt in April, and affirmed the rating on Thursday.
Moody’s is reviewing South Africa’s credit rating for a possible downgrade.