Ratings gency, Standard & Poor’s is set to announce its decision on South Africa’s credit rating on Friday.<\/p>\n
The country is currently one notch above sub-investment status.<\/p>\n
The general consensus among economists is that South Africa will avoid a downgrade to\u00a0 junk status until at least the end of the year.<\/p>\n
Finance Minister Pravin Gordhan believes that the country will avoid a downgrade. \u201cI think we\u2019ve done enough to pass the June hurdle,\u201d he said in an interview with Bloomberg TV in Paris on Wednesday. \u201cIn the next six months we have to do more, particularly in terms of implementing what we\u2019ve decided.\u201d<\/p>\n
S&P and Fitch both rate South African debt one level above junk. S&P, which has a negative outlook on its BBB- assessment, is due to announce whether it will downgrade the rating on June 3, while Fitch hasn\u2019t said when it will announce the outcome of its review.<\/p>\n
Twelve of 13 economists and analysts surveyed by Bloomberg in April said they expected S&P to lower the rating to non-investment grade by the end of this year, with four expecting the downgrade to BB+ to happen this week.<\/p>\n
That would put South Africa on par with Turkey and Indonesia.<\/p>\n
\u201cWe are at a big risk of being downgraded,\u201d Thabi Leoka, an economist at Argon Asset Management, told Bloomberg on Thursday. \u201cI think it\u2019s a 50\/50 probability.\u201d<\/p>\n
If the rating is cut \u201cthere could be a bit of a shock,\u201d said Malcolm Charles, a portfolio manager at Investec Asset Management. \u201cThere\u2019ll be quite a negative reaction from bonds, equities and the currency come Monday morning. It\u2019ll be quite a nasty start to the week.\u201d<\/p>\n
The rand traded at R15.54 versus the dollar in morning trade on Friday.<\/p>\n
Reporting with Fin24<\/a><\/em><\/p>\n What a ratings downgrade means for the rand<\/strong><\/a><\/p>\n What junk status means for South Africa<\/a><\/strong><\/p>\nMore on South Africa’s credit rating<\/h3>\n