Fitch Ratings downgraded South Africa’s local-currency debt assessment one level to bring it into line with the nation’s foreign-currency rating.
The move was part of a review of Fitch’s local-currency assessments, applying new criteria that resulted in downgrades for 23 issuer default ratings, the company said in a report that was first published on Friday, July 22. The outlook for South Africa’s rating was kept at stable.
“Whilst a change on technical criteria to the local ratings for South Africa, this does bring the narrative around local ratings entering sub-investment grade onto the table once again,” Peter Attard Montalto, an economist at Nomura International Plc in London, said in an e-mailed response to questions. “It means a widely expected downgrade of the foreign rating would also bring the local rating into junk.”
Fitch kept its evaluation of South Africa’s foreign-currency debt at BBB-, one step above sub-investment grade, in June after cutting it a level in December. Moody’s Investors Service left South Africa’s credit rating at two levels above non-investment grade in May, while S&P Global Ratings kept its assessment at BBB-, one level above junk, last month.
The rand strengthened 0.5 percent to 14.2856 per dollar by 7:51 a.m. in Johannesburg, ending two days of declines. Yields on South African rand-denominated debt due December 2026 were little changed at 8.78 percent.