S&P expected to keep SA credit rating at stable

The international credit rating agency is expected to issue its credit review on Friday afternoon.

In March, S&P downgraded South Africa’s credit rating outlook to stable from positive amid the load shedding crisis and weak economic growth.

Efficient Group chief economist Dawie Roodt says there could still be a scenario where S&P changes South Africa’s outlook to negative.

“If S&P decides to keep our rating level at stable it will be a bit of a surprise. It will be supportive of the exchange rate of the rand, as an example, and also perhaps of the capital market. But then that would mean that we really have to pull up our socks in South Africa to prevent an eventual negative outlook and an eventual further downgrade.”

Roodt says S&P is by far the largest and the most credible rating agency, meaning its opinion carries a lot of weight.

“But currently South Africa is a so-called junk bond, and it effectively depends on what rating agencies look at, which category we are at by all the major rating agencies. We are currently considered as junk, they circle junk bonds, but we have to remember that there are different levels of junk and you can get even junkier.”

ALSO READ