HILARY JOFFE: There's something worse than junk status - and that's deep junk

01 December 2019 - 00:09

Does it matter if SA is just junk, or even more junky? Ratings agency Moody's recent decision to put SA on negative outlook caused consternation. But S&P Global's decision to do the same caused hardly a murmur - because S&P already has SA at sub-investment grade "junk" status, as does rival Fitch, whereas Moody's has kept us at investment grade. In S&P's case, SA's foreign currency rating - the rating on our dollar-, euro- or yen-denominated debt - is already two notches into "junk", or speculative grade. A further downgrade would take us down to BB- (double B minus). It would put us on par with countries such as Brazil, Bolivia and Bangladesh, as well as Greece and Guatemala.

In a way, that confirms that SA is just another emerging market on the S&P scale - not a weak one (Zambia is rated CCC), but not one of the strong ones such as India or Mexico, either. At Moody's, too, emerging markets are typically junk - a recent report showed just 32 of the 106 emerging-market sovereigns it now rates are investment grade...

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