What junk tells us about our debt trap
Moody's won no fans in March when it chose the day after SA went into lockdown to junk SA's credit rating, becoming the last major rating agency to do so. At five minutes to midnight last week on Friday, it took the rating one notch further into sub-investment grade - junk territory. Not long after, rival Fitch did the same. The result is that all three major international rating agencies have SA two notches below the investment-grade band.
Decisions by Moody's and Fitch surprised most economists, who had expected the agencies to wait until after the February budget. But the market was unfazed, with the rand and bond yields even strengthening, as global market euphoria about a Covid vaccine continued to drive capital inflows into emerging markets, including SA...