Rating drop for SA not sure thing

Fitch vows junk status not on cards

SOUTH Africa’s sovereign credit rating will not be downgraded to speculative grade or junk status in June, Fitch Ratings said yesterday.

Fitch’s head of Middle East and Africa sovereign ratings, Richard Fox, said yesterday that even if South Africa were to be downgraded, it would not be to junk status.

It was not a foregone conclusion that the country would be downgraded in June, according to Fox. Fitch would review South Africa’s BBB (credit) rating, which has a negative outlook, then.

“I stress [that] if we do take the rating down in June . . . it is pretty certain it will only be by one notch and so South Africa would still remain investment grade,” he said. “This concept of junk is not on our radar.”

Most investors only invest money in countries that have investmentgrade ratings.

Weak economic growth, and failure to reduce the budget deficit and stabilise debt are among the factors weighing on South Africa’s rating, according to Fitch. Addressing these issues would be ratings-positive.

Fitch is the only one of the three major ratings agencies to have a negative outlook on the rating.