National Treasury has said government is focussing on regaining the country’s investment grade status, after global rating agency S&P kept SA’s sovereign credit rating unchanged at below investment grade on Friday evening.
S&P affirmed the country’s long term foreign currency debt rating at ‘BB’ and its local currency debt rating at ‘BB+’. The outlook for both ratings was stable. ‘BB’ is the second rung of non-investment grade, while ‘BB+’ is one step below investment grade.
In a statement S&P said that, in the wake of SA’s election, government was “likely to focus more on new policy initiatives that will aim to support firmer economic growth and reform state-owned companies”.
It added that SA’s fiscal position remained weak, with “sizable fiscal deficits, a large debt burden, and sizable contingent liabilities, largely tied to the energy utility Eskom”.
The credit ratings agency first downgraded SA’s sovereign debt to non-investment grade, or junk, in late 2017. Of the three major ratings agencies, only Moody’s has kept SA at above investment grade.
In response to the ratings action, National Treasury said it “fully recognises S&P’s assessment of challenges and opportunities the country faces in the immediate to long term”.
“The main focus for government remains to regain South Africa’s investment-grade status to make the country an attractive investment destination.”