{"id":212085,"date":"2017-11-22T07:43:41","date_gmt":"2017-11-22T05:43:41","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=212085"},"modified":"2017-11-23T10:44:20","modified_gmt":"2017-11-23T08:44:20","slug":"south-africa-under-threat-of-a-7-billion-debt-selloff","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/212085\/south-africa-under-threat-of-a-7-billion-debt-selloff\/","title":{"rendered":"South Africa under threat of a $7 billion debt selloff"},"content":{"rendered":"
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South Africa will confront the threat of a $7 billion debt selloff this week as it awaits two concurrent judgments on its credit status.<\/p>\n

Opinion among economists is divided as to how stark a danger that is. Fifty-six percent of respondents in a Bloomberg survey said S&P Ratings will reduce its assessment to the highest non-investment grade on Friday. Moody\u2019s Investors Service, which is scheduled to make a decision, will likely leave it unchanged, according to three-quarters of those asked.<\/p>\n

Will S&P cut?\u00a0 Yes 9 – No 7<\/p>\n<\/div>\n

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Will Moody\u2019s cut? Yes 4 – No 12<\/p>\n

Should both companies cut, rand debt would fall out of gauges including Citigroup Inc.\u2019s World Government Bond Index, sparking outflows of 80 billion to 100 billion rand, Citigroup economist Gina Schoeman said. This would raise borrowing costs for the nation that\u2019s selling more debt to plug a widening budget gap.<\/p>\n

Conflict in the ruling party in the run-up to its leadership election next month has hamstrung efforts to bolster the Africa\u2019s most-industrialized economy, which had its second recession in less than a decade earlier this year. Business confidence is near the lowest in more than three decades amid allegations of corruption against state companies\u2019 managers and politicians including President Jacob Zuma.<\/p>\n

\u201cGiven the fraught political context in which South Africa finds itself, alongside the negative repercussions of downgrades in triggering ejection from key bond indices, we believe that the rating agencies will not rush to cement decisions to downgrade this month,\u201d said Phoenix Kalen, director for emerging-markets strategy at Societe Generale SA in London.<\/p>\n

The sustainability of the nation\u2019s debt will be at risk unless government presents a credible fiscal-consolidation plan in 2018, Moody\u2019s said after the mid-term budget last month.<\/p>\n

While the outcome of the ruling African National Congress\u2019s elective conference next month will be of interest to ratings companies, it\u2019s the February budget that they\u2019ll be watching for clues on the country\u2019s debt direction, said Annabel Bishop, the chief economist at Investec Bank.<\/p>\n

Fiscal detail<\/strong><\/p>\n

\u201cThe budget will provide the fiscal detail that was lacking in the 2017 medium-term budget policy statement, which is needed in assessing South Africa\u2019s creditworthiness,\u201d she said. \u201cThe likelihood has increased for South Africa to lose its remaining investment-grade ratings.\u201d<\/p>\n

Investors are pricing in a downgrade of South Africa\u2019s debt, with yields on dollar securities surpassing those of lower-rated countries such as Brazil and Russia.<\/p>\n

Still, investors\u2019 search for higher yields could help counter some of the expected outflows, Citigroup\u2019s Schoeman said.<\/p>\n

S&P and Fitch Ratings both rate South Africa\u2019s foreign-currency debt at the highest non-investment grade. They lowered their assessments within a week of Zuma\u2019s March 31 replacement of then Finance Minister Pravin Gordhan with Malusi Gigaba.<\/p>\n

Moody\u2019s, which has South Africa\u2019s foreign-currency rating at the lowest investment grade, won\u2019t lower its assessment, 10 of 16 respondents in the Bloomberg survey said.<\/p>\n

\"\"<\/a><\/p>\n<\/div>\n

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Read: What will happen to the rand if Ramaphosa, Dlamini-Zuma or Mkhize comes out on top in December<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa will confront the threat of a $7 billion debt selloff this week as it awaits two concurrent judgments on its credit status.<\/p>\n","protected":false},"author":59,"featured_media":178577,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[1512,12585],"class_list":["post-212085","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-moodys","tag-sp-ratings"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/212085","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=212085"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/212085\/revisions"}],"predecessor-version":[{"id":212543,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/212085\/revisions\/212543"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/178577"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=212085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=212085"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=212085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}