Rating agency Fitch has downgraded South Africa's credit rating, pushing it further down the junk scales. The downgrade sent the rand hurtling to fresh historic lows against the dollar.
Rating agencies have been busy of late as the Covid-19 pandemic wreaks unprecedented havoc on the global economy. Perhaps they should just relocate to the moon and downgrade planet Earth.
South Africa got its second lockdown downgrade on 3 April 2020 when Fitch - which three years ago had assigned Pretoria's debt a "junk rating" - dropped its rating another notch to "BB" from "BB+". The rand, which has been on the ropes for a long time, took another beating, hitting fresh lows above 19 to the dollar. The consolations are that the oil price has tanked and that (#affluentclass/WMC/ANC/EFF), no one is taking an overseas trip anytime soon.
Fitch also placed its outlook on "Negative", which means it expects to pull the trigger again. This move, of course, followed Moody's 27 March 2020 downgrade, which cemented South Africa's credit status as junk across the board. It is well known that this means investors will demand a higher rate of interest for lending, which will raise borrowing costs and leave less...