On the 29th of March Moody’s will announce the results of it’s review of South Africa’s sovereign debt ratings. Moody’s is the only major ratings agency that has not already downgraded South Africa’s sovereign debt to junk. Currently Moody’s has South Africa’s rating at Baa3, one notch above sub-investment grade.
The outcome of the review might be any of the following:
- Keep the rating the same with a stable outlook (i.e. no downgrade likely in the next 12-18 months)
- Change the outlook to negative (i.e. possible downgrade within 12-18 months)
- Place S.A. on a ratings watch (i.e. review for a downgrade within 3 months)
A cut to South Africa’s credit rating would see government bonds ejected from the World Government Bond Index with estimated outflows from the bond market of between $ 8bn and $ 10bn. However, it seems unlikely that South Africa will be downgraded or receive a negative outlook on the 29th, although a postponed downgrade would still remain a possibility.
Read more below for South Africa’s Market Overview: