Tag Archives: junk
junk: Latest News
Reuters, 9:48 am
The pool of potential buyers is shrinking that Barclays’ can sell shares to in its African business. Some institutional investors, including pension funds, do not allow them to hold an asset that’s sliding on credit ratings. Barclays is struggling to find one strategic buyer that will satisfy South African regulators and is looking to sell its remaining 50% stake in chunks. More than 80% of its revenue is in South Africa. “Banks are paying the price for political uncertainty that we’ve seen in the country over the past two weeks,” a fund manager said.
Staff, 5:34 pm
South Africa this week put on hold proposals to introduce a national minimum wage as part of an effort to stabilize the labor market. Labor upheaval is a potential risk factor to the country’s credit rating, which faces in the next two weeks a possible downgrade to junk status by ratings agencies. The economy has grown slowly in the last six years — too slowly to recoup the 1 million jobs lost during the 2008-2009 recession. Despite the gloomy numbers, the rand held its ground, propped up by firmer metal prices which boosted commodity currencies.
Dana Sanchez, 10:39 pm
The rand is becoming one of this year’s best trades. As it continues to strengthen, ratings agency Moody’s said the chance of a credit downgrade for South Africa is less than 50 percent. A credit ratings cut is likely if economic growth falls below South Africa’s estimated 0.2 percent this year. However some analysts say the rand’s rally could be short-lived and it could fall back down to 17 per dollar before the end of 2016.
Dana Sanchez, 3:44 pm
Fifteen countries have had their investment-grade ratings revoked including India — twice. It took an average of seven years to regain their status. In May, South Africa escaped a downgrade from credit rating firm Moody’s, which held its rating at Baa2. Fitch is expected to issue its review next week. Like S&P, Fitch rates South Africa one rung above subinvestment grade.
Staff, 8:32 pm
Any recovery in Nigeria’s currency will have to be supported by higher crude oil prices, an analyst said — like close to $55 a barrel. Famed short seller James Chanos said he’s shorting South African assets, partly because of their exposure to Nigeria. Last week, Nigeria’s stock market rallied after the MSCI Frontier Markets Index decided to keep the country in the benchmark, after warning in April that Nigeria was at risk of being booted from the index. Still, the outlook for Africa’s largest economy remains grim.
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