South Africa: A-Grade Doubts

editorial

Johannesburg — WHEN international credit rating agencies rate a country's creditworthiness, they give it two rankings: one, in foreign currency, applies to any debt the country issues on international markets, in dollars, euro or yen. The other, the local currency rating, applies to debt issued on the domestic market in the country's own currency -- in our case in rand.

Most of the time, the two ratings would be the same -- the assumption being that what matters to international investors in the country's bonds is much the same as what matters to local investors. But SA has long been unusual in that its ratings have been different: essentially, our ability to repay debt in dollars, say, was considered rather less certain than our ability to repay it in rand.

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