Dodged the bul­let, for now

Finweek English Edition - - MARKETPLACE SIMON SAYS - Edi­to­rial@fin­week.co.za

The rating agen­cies have spo­ken and Moody’s was the sur­prise, leav­ing South Africa’s rating un­changed at two notches above junk with a neg­a­tive outlook. Fitch dropped us to neg­a­tive outlook at one notch above junk, and Stan­dard & Poor’s (S&P) dropped the lo­cal rand debt rating to one notch above junk and neg­a­tive outlook, while the off­shore rating was left un­changed at just above junk and neg­a­tive. In short, we avoided junk sta­tus; some­thing I did not think we would achieve, and now all at­ten­tion turns to 2017. All the agen­cies com­mented on sta­te­owned en­ter­prises and po­lit­i­cal is­sues while also high­light­ing a lack of GDP growth. The risks have not gone away and, im­por­tantly, when placed on neg­a­tive outlook, the agency ei­ther needs to drop the rating or make us sta­ble within two years. So, we’ll be watch­ing the June and De­cem­ber up­dates from S&P. I think the risks of a drop to junk re­main real, but maybe the odds have shifted to even, rather than my 2016 view that the odds favoured a drop to junk from S&P.

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