From Bloomberg
Standard & Poor’s kept South Africa’s credit rating at BBB, while warning that a deterioration in the nation’s current-account and fiscal deficits may prompt a second downgrade.
While the government is “ensuring broad and largely pragmatic policy continuity,” the nation’s ratings are constrained by a wide current-account deficit that makes it vulnerable to capital outflows, S&P said in a statement.
S&P retained a negative outlook on the debt rating, which is the second-lowest investment-grade level and on par with Brazil, Russia and Colombia. That reflects the fact that the country’s lackluster economic performance, external imbalances and labor tensions could affect the macroeconomic policy framework, it said.
“We could lower the ratings if external imbalances continue to increase, or funding for South Africa’s current-account or fiscal deficits becomes less available,” S&P said.
The statement comes two days after Fitch Ratings maintained South Africa’s rating at BBB with a stable outlook. Moody’s Investors Service rates the debt at Baa1, which is one level above Fitch and S&P, with a negative outlook.
The S&P action “removes one of the risks we think could have weighed on South Africa’s currency and asset markets heading into 2014,” Peter Worthington, an economist at Johannesburg-based Barclays Africa Group Ltd.’s investment banking unit, said in an e-mailed note to clients today. “We do not now see any near-term risk of rating changes in the absence of some major unforeseen shocks.”
Written by Jaco Visser and Rene Vollgraaff/Read more at Bloomberg
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