Relief as South Africa avoids junk status
There's a collective sigh of relief this evening as South Africa has averted a downgrade to junk status.
American ratings agency, Standard & Poor's has decided to keep the country's outlook negative.
The much-anticipated announcement came a short while ago, following weeks of anxiety and concern over the possibility the country's sovereign credit rating would be downgraded to sub-investment status.
Meanwhile, economic adviser for PwC, Roelof Botha says while there are socio-political problems in South Africa, there should not be such a huge emphasis on what international ratings agencies think of our affairs.
"I mean it's frightening. How can it be that three companies that have a monopoly - 95% of the market on these credit ratings - can yield so much influence on governments all over the world. It just doesn't make a lot of sense, quite frankly - especially if you take into consideration that one of these agencies gave Enron a AAA rating four days before that company filed for bankruptcy."
"This S&P rating is only relevant to South Africa's foreign currency denominator debt, and that's less than 10% of total public debt. So, quite frankly, this is a bit of a storm in a teacup as far as I am concerned," Botha said.
Last month, Moody’s confirmed South Africa's adjusted South Africa's outlook from stable to negative, while confirming the country's credit rating at Baa2.