Banking

Moody's downgrades South Africa rating to 'junk', keeps negative outlook

Credit: REUTERS/Mike Segar

Ratings agency Moody's downgraded South Africa's sovereign credit rating to "junk" status on Friday, moving the rating down to 'Ba1' from 'Baa3' and maintaining a negative outlook.

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JOHANNESBURG, March 27 (Reuters) - Ratings agency Moody's downgraded South Africa's sovereign credit rating to "junk" status on Friday, moving the rating down to 'Ba1' from 'Baa3' and maintaining a negative outlook.

The agency said in a statement that the main driver behind the downgrade was "the continuing deterioration in fiscal strength and structurally very weak growth".

"The unprecedented deterioration in the global economic outlook caused by the rapid spread of the coronavirus outbreak will exacerbate the South Africa's economic and fiscal challenges and will complicate the emergence of effective policy responses," it added.

The majority of analysts polled by Reuters this week had predicted the downgrade.

The agency is the last of the big three agencies to downgrade Africa's most industrialised economy to sub-investment grade, after S&P Global and Fitch moved in 2017.

Moody's left South Africa on the brink of junk in November after it revised the outlook on its 'Baa3' rating to negative following a bleak mid-term budget.

An annual budget in February showed a further worsening of the fiscal picture.

(Reporting by Alexander Winning; Editing by Olivia Kumwenda-Mtambo and Diane Craft)

((alexander.winning@tr.com; +27 11 595 2801))

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