Likelihood of South Africa downgrade to junk remote — S&P

Johannesburg, south Africa, Capital Markets in Africa — South Africa is unlikely to immediately face credit downgrades that will rank the country’s debt junk at two ratings companies, according to Standard & Poor’s.

“Losing two investment-grade ratings, that could be very disruptive” for markets and capital flows …  But that’s a very remote possibility”, Konrad Reuss, S&P’s sub-Saharan Africa Managing Director, said at the 13th Annual African Capital Markets Conference in Cape Town on Thursday November 26 2015.

The nation’s “credit metrics are certainly not improving, but also they’re not going over a cliff,” Konrad Reuss stated. “The medium-term question for us is ‘do we have to change the outlook to reflect that.’”

S&P has a stable outlook on South Africa’s BBB- assessment, which is the lowest investment-grade rating. Fitch Ratings had a negative outlook on its BBB assessment, indicating that it may downgrade the nation’s creditworthiness at its next review.  Fitch’s rating is in line with

On November 6, Moody’s Investors Service downgraded the South Africa’s debt rating to Baa2 (one level about S&P’s BBB-) from Baa1 and changed the outlook to stable from negative.  

South Africa’s economy grew by 0,7% in the third quarter of 2015, according to preliminary estimates of real gross domestic product (GDP) released by Statistic South Africa. After experiencing a 1.3% contraction in the second quarter, the marginal GDP growth in the third quarter staved off a technical recession. A recession is usually said to occur if a country experiences two consecutive quarters of GDP decline.