News24
12 Aug 2019, 17:44 GMT+10
Moody hasn't said it, but investors already think it: South Africa's credit is junk.
The company, which rates South Africa's debt Baa3, the lowest investment level, is due to review its assessment in November. Given Eskom's financial woes and its implications for government debt, the market is pricing in a downgrade.
The premium investors demand to hold South Africa's dollar bonds rather than US Treasuries is almost twice as much as the average for investment-rated emerging markets. It's also wider than the spread for Brazil, which has a non-investment grade rating from Moody's, S&P Global Ratings and Fitch Ratings. The risk premium has climbed since mid-July, when the government announced it would increase borrowing to support Eskom.
South Africa isn't benefiting from the global hunt for yield. While average local-currency yields for emerging markets have been falling, South Africa's have been rising. The premium of South African yields over developing-nation peers is now at the highest since February. That suggests investors are positioning for fiscal deterioration, and a credit downgrade.
READ | Moody's: SA's Eskom bail out plan credit negative
The cost of insuring South Africa's debt against default is much higher than that of Russia, which has a similar Baa3 rating with Moody's. It's also higher than Brazil, rated two levels lower.
Moody's has been "too kind," said Win Thin, head of currency strategy at Brown Brothers Harriman & Co, who predicts South Africa's credit rating may fall three levels into junk.
Get a daily dose of Sierra Leone Times news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Sierra Leone Times.
More InformationANDOVER, Massachusetts: As artificial intelligence drives up energy demand across the United States, Schneider Electric is making a...
WASHINGTON, D.C.: U.S. consumer confidence continued to drop in 2025, hitting its lowest level in 12 years as more Americans worry...
WASHINGTON, D.C.: Alphabet's self-driving division Waymo is preparing to expand its driverless ride-hailing footprint to the heart...
BENGALURU, India: A major regulatory breakthrough in India could mark a turning point for Starlink, Elon Musk's satellite internet...
NEW YORK, New York - Renewed fears about inflation, and U.S. Donald Trump's trade policies say American markets take a deep dive Friday....
NEW YORK CITY, New York: Segway is recalling about 220,000 scooters in the U.S. because of a safety issue that can cause riders to...
CAPE TOWN, South Africa: The U.S. Embassy in South Africa said it received a list of over 67,000 people interested in refugee status...
(250330) -- SINGAPORE, March 30, 2025 (Xinhua) -- Nakanishi Yuki (R) of Japan guards against Kelvin Lim Hong Da of Singapore during...
Abu Dhabi [UAE], March 30 (ANI/WAM): The United Arab Emirates continues to support relief and humanitarian aid efforts for Sudanese...
A press conference is held during the Africa-China-CIMMYT Science Forum in Nairobi, Kenya, on Aug. 13, 2024. (Xinhua/Li Yahui) China's...
Coimbatore (Tamil Nadu) [India], March 30 (ANI): Dr S Raja Sabapathy, chairman of the Department of Plastic, Hand, and Microsurgery...
ABU DHABI, 30th March, 2025 (WAM) -- The United Arab Emirates continues to support relief and humanitarian aid efforts for Sudanese...