Tag Archives: S&P
S&P: Latest News
Tom Jackson, 1:00 am AFKI Original
South African startups were the most popular in Africa for investment in 2016, with Cape Town and Johannesburg establishing themselves as hubs. Junk status could have a serious impact on this. Michael Jordaan, former CEO of South Africa’s First National Bank, is now an investor in innovative tech startups. The ratings downgrade is bad news for the economy as a whole but startups will be less affected than larger firms, he told AFKInsider. “Startups need to dominate a niche at first and in this sense the macro economy is a very small factor,” he said. “Startups should take comfort that they will survive and thrive if they keep their customers happy.”
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.
Reuters, 12:25 pm
Fitch said Zuma’s recent cabinet reshuffle will likely result in new economic policy. Downgrades to junk — first by S&P on Monday and today by Fitch — could see South Africa fall off some global bond indexes. This may force international funds that are prohibited from holding sub-investment grade securities to sell. There is still is a huge wealth gap between blacks and whites, Zuma said in his SONA address. Zuma’s presidency has been riddled with corruption accusations and money-related scandals. He has called for radical economic transformation.
Dana Sanchez, 10:34 am
S&P is the first agency to downgrade South Africa’s sovereign debt to non-investment grade. SA’s banks have proved that they can weather storms. “We have 50 percent more capital than in the global financial crisis and all South African banks came through that event fine,” a stakeholder said. March was a record month for trading volume in SA bonds. S&P’s decision doesn’t impact SA’s eligibility in global bond indices yet. But more ratings downgrades and increased trading volumes could. “The real issue is the impact on economic growth, industrial performance and employment,” a wealth manager said. “There is a negative relationship between economic growth and bank assets.”
Peter Pedroncelli, 6:02 am AFKI Original
Despite all of the issues plaguing South Africa at the moment, the country may manage to avoid a ratings downgrade in 2016. After surviving the potential downgrade of the country’s investment grade credit rating in June this year, the ratings agencies are set to pronounce judgement on South Africa once again in the coming months, and there is a risk that the country could be downgraded to below junk status. Here are 12 reasons why South Africa will avoid a ratings downgrade this December.
Staff, 3:04 pm
Efforts to set up a BRICS credit rating agency hit a roadblock Sunday. China is concerned and not in favor. Some members worry about lack of credibility and access to dependable data as they take on Wall Street’s Big 3 — S&P, Fitch and Moody’s. Fraud charges against South African Finance Minister Pravin Gordhan have raised fears the country is moving closer to a junk rating by Wall Street credit ratings services.
Dana Sanchez, 6:01 pm
South African public protector Thuli Madonsela was due to release a report Friday involving allegations that the Gupta family acted on behalf of President Jacob Zuma. Zuma’s office said Thursday that the report is on hold by court order. Undermining key South African institutions like courts, treasury, and the South African Reserve Bank would see the country likely downgraded to junk status, rating agency Standard & Poor’s (S&P) said Thursday.
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.
Kevin Mwanza, 9:24 am
Global rating agencies Fitch and Standards & Poor’s (S&P) cut South Africa’s Economy credit standings to just a level above junk status as the country struggles with an array of both external and internal factors. In reaching its decision Fitch cited slowing growth, declining business confidence and a stretched debt position, while S&P raised the same concerns but added that it was unlikely to be fixed anytime in the near future.
Jeffrey Cavanaugh, 3:25 am AFKI Original
If labor continues to press its advantage through widespread industrial actions the South African economy will continue to do extremely poorly and could even slip much further. This will mean continued downward pressure on the rand, the possibility of further ratings cuts, and a limit to how much foreign firms will want to see invested into what is now Africa’s number two economy.
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