Downgrade risk looms for South Africa in 2017: Moody’s
Several countries including South Africa, China and Britain will all face key ratings decisions in 2017 as rising political risk and debt levels push the number of countries on a downgrade warning back to a record high says ratings agency Moody’s.
According to Alastair Wilson, Moody’s managing director of sovereign risk, over a quarter of the world’s sovereigns are on a negative outlook, which is the highest proportion since 2012 .
While the UK faces the pressures of leaving the European Union and the USA will have to deal with a controversial new president in 2017, South Africa, Brazil and China are all particularly at risk if they don’t re-orientate their economies, Wilson said.
Speaking on South Africa, Wilson noted that the situation was still salvageable in the country although the government’s politicking had been noticed on the international stage.
“Certainly it’s fair to say (political) noise has risen in recent months, but that isn’t necessarily significant from a credit perspective. South Africa’s institutional strength had also been bolstered by a key court throwing out a recent fraud case against the country’s finance minister”, Wilson said.
Moody’s currently rates South Africa at “Baa2”, one notch higher than fellow ratings agencies S&P and Fitch, and two notches above junk status. It currently has the country at a negative outlook.
Read: Why credit ratings matter and why they can’t be ignored
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