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As we all know, the final rating agency - Moody’s - which for all this time had not downgraded SA, finally made that decision on Friday. It came at a time when our currency had already been hit very hard by all the troubles of Eskom, SAA and then Covid-19 which hit all emerging economies. In some ways I guess it is a sense of relief – it was inevitable, and we no longer have to worry about whether it will be the next time or now. It is done and perhaps it will not turn out to be as bad as we thought, given that lots of people have sold out of emerging economies in the first place and presumably there is not that much more money invested in SA government bonds that still need to be sold by funds that cannot hold junk. We join countries like Russia which already had junk status and SA has far tougher challenges to deal with in the past than something like that. It probably means that at some point interest rates will have to increase, because to attract funds we will have to pay more interest to make up for the risk that the companies are taking in investing in South Africa. As I say, we have all expected this for a long time and on the plus side we got the bad news out of the way. I personally think that the Rand is worth a bit of a bet to improve. I don’t say it will go back to R14 to the Dollar, but I don’t think it will stay as consistently low as R18 for the next 12 months either.
Posted by Michael de Broglio on Tuesday 31-Mar-20
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Comments
Ziyanda said:
on Monday 11-May-20 03:40 PM
Our country was already struggling before COVID-19, the downgrade was inevitable. After this crisis our government really needs to change our economic situation.
Joyce said:
on Friday 08-May-20 12:58 PM
I think the downgrade been long holding and think that there was no way SA continues to survive while had to deal with Covid 19 crisis
Jessica said:
on Wednesday 08-Apr-20 11:20 AM
For some reason I don't think our President cares about our status. It is sad actually. Because one would want their country to be in a good status as with the other countries. But currently I think our President is just more worried about his people and will worry about that later on.
Tamaryn said:
on Wednesday 08-Apr-20 11:13 AM
The downgrade was probably a few months behind. That we weren't downgraded prior to this is a surprise. Understandably the interest rates will go up but this will add an even greater financial burden to most. I think SA is in for some very tough times.
Brenda Strydom said:
on Friday 03-Apr-20 09:15 AM
Our economy is taking a big knock because of this virus.Let's hope for something positive we can get over this.
Melissa said:
on Friday 03-Apr-20 07:44 AM
A person can never win. I am just worried about our children in this country and if they will have a future. We must just hope and pray for the best and let's hope this country can make it's way up again
Tersia said:
on Thursday 02-Apr-20 08:19 AM
Like you said - now it's official and we can stop worrying about when it was suppose to happen as we all knew it was going to happen. Perhaps the country can now start focusing on getting us out of Junk status - when this whole Corona Virus starts to settle down a bit.
Ruby said:
on Wednesday 01-Apr-20 10:00 AM
This downgrade is a further blow to South Africa amidst the Covid - 19 disaster. This means higher borrowing costs at a time when government needs more money to fight Covid. This also impact on investor confidence. We live in truly terrifying times.
Sinead said:
on Wednesday 01-Apr-20 08:12 AM
Was it only made official now? I thought we were downgraded a while ago. Not the point though...
Where do we go from here? If the country is at a stand-still, how do we ever improve? Which investors will we be attracting?
sandra said:
on Wednesday 01-Apr-20 07:33 AM
I thought it was already on this status even way before the corona virus. Our economy has been taking a great knock in the past few years and it will take a lot of effort to improve same
Henrietta said:
on Tuesday 31-Mar-20 08:16 PM
As you've said, we all knew it was coming. Just bad timing. After this lockdown everyone if going to try and pick up the pieces only to discover there are more pieces. we some of the privilege who is able to work from home or able to take leave for this lockdown, imagine the people unable to so, unpaid plus increases on monthly expenses.Hopefully we'll be able to recover this oneday.
Danielle said:
on Tuesday 31-Mar-20 07:15 PM
A lot of people are thinking its a joke but up until you actually watch the movie Contagion then people will understand the severity of this. People will need to pray and start abiding with the rules.
Helen said:
on Tuesday 31-Mar-20 06:54 PM
We were getting so close to the Junk status November last year, and now in march thanks to Lock down and Covid-19 we made it.
I think for us only one lesson to learn and start changing managing government, systems in place.
Thabitha said:
on Tuesday 31-Mar-20 06:31 PM
South Africa is facing lots of challenges and also coronavirus is playing a bad role of weakening the rand. but lets hope things will change and the rand will somehow be straighten.
Cornelie said:
on Tuesday 31-Mar-20 05:45 PM
Now we as tax payers will pay even more the less fortune will struggle more.
Claudia B said:
on Tuesday 31-Mar-20 05:37 PM
Everyone knew this was coming and now it's here, we got downgraded to junk status, let's hope for something positive in this bad time for SA.
Chante said:
on Tuesday 31-Mar-20 05:27 PM
This truly was bound to happen one day or another and South Africans are truly facing a steep uphill to climb before things get better again. Hopefully, things will improve sooner rather than later - the impact this virus has on so many countries is astonishing.
Victoria said:
on Tuesday 31-Mar-20 05:26 PM
We all knew this was coming just didn't know when it would happen. Covid-19 is taking a big toll on the whole world, and is not going to help with South Africa's economy. Hopefully something will change that will build us up again.
Bronwyn said:
on Tuesday 31-Mar-20 05:02 PM
this was bound to happen sooner or later,it is unfortunate that it has to be now,
Daniella said:
on Tuesday 31-Mar-20 01:04 PM
Im not surprised that we are currently at Junk Status - Developed countries are struggling with their economy during Covid- 19. We were struggling with our economy before Covid-19. Hopefully after it all we can work our way up.
Nicolle said:
on Tuesday 31-Mar-20 11:54 AM
It was inevitable. COVID-19 and a country under lock-down was the final straw. That being said, who doesn't like a good underdog story?
Sujata said:
on Tuesday 31-Mar-20 11:52 AM
SA always circled the drain when it came to junk status but I agree atleast the expectation of uncertainty has now been removed and we will inevitable pay more interest. The Rand will strengthen abit given our current circumstances and yes it may not be what we would hope but interested to see how the coming times will be. For some that have investments it is intriguing that those investments have increased to some extent despite junk status
clare said:
on Tuesday 31-Mar-20 11:02 AM
I always though we were in Junk Status, with Cream and Job less People I truly did not think we would ever get upgrade, so this is no surprise to me, And I bet now with this national Shutdown its not going to get better, all we can do as South Africans is pray and hope that things will get better, just keep pushing on.
Mathilda Du Preez said:
on Tuesday 31-Mar-20 10:45 AM
This has not come as a surprise as we suspected it to happen and I'm surprised that it took Moody's this long to downgrade us?
This will push up the cost of government debt and this will worsen amid the COVID-19 crisis.
I read that Moody’s expects that SA’s debt burden will reach 91% of GDP by 2023.
Angelique said:
on Tuesday 31-Mar-20 10:44 AM
It was bound to happen... When you are rock bottom there is literally no where to go but up? I think we just need to be optimistic and just try get on with it. I know easier said than done when most things everywhere around the world is falling apart. We have some tough times ahead of us... brace yourself South Africans.
Lucretia said:
on Tuesday 31-Mar-20 10:42 AM
Junk Status scares me, it will squeeze us more than ever before. However, i am not surprised by this - I am glad that the one person who can help us out of this is, himself a business man and not just a president. Let us hope his governing smiles sweetly on us and that his wanting to stop corruption will pay off in the long run of lifting the counties status.
Michelle D said:
on Tuesday 31-Mar-20 10:20 AM
There has actually been a lot of criticism on Moody's as to why they have waited until now to downgrade us to junk. Economists are saying that it should have been done ages ago. I read an interesting article which said that in ordinary circumstances this would be quite detrimental to our country...but given the fact that we are not living through ordinary circumstances, it will have a much lesser effect. We are now one of the most desirable 'junk' economies to invest in.
fikile said:
on Tuesday 31-Mar-20 10:18 AM
Can things get any worse for SA because now the country is facing a lot of problems without solutions and this is getting more and more bad. It only means that people can't get loans or even home loans and with the rate increasing people wont be able to survive, already people can't survive with the current interest rate.
Dasanya said:
on Tuesday 31-Mar-20 10:07 AM
This downgrade was inevitable and definitely had most South Africans on edge when it came to a decision by Moody's on whether to downgrade South Africa or not. I am glad that it has happened now rather than at a later stage. Our country is facing some really tough issues at the moment but maybe this will help us pull together as a country and focus on the tasks at hand to move forward. We were at one point the country with the richest economy in Africa and I have no doubt that with the right leadership and decision-making, we can get to that point again. It just requires a whole country to work together.
Bianca Niemann said:
on Tuesday 31-Mar-20 09:45 AM
Sad news, especially in a time like this when our economy already took a blow due to the Covid-19 virus, but as you say it was inevitable and it's best to just get it out of the way.
Sarah said:
on Tuesday 31-Mar-20 09:37 AM
This was no surprise to us, I just wish people in this country stop thinking short term and more long term. Start working together not being racists. Start voting for the right government to take over. Now your bonds are going up etc
Zandelee said:
on Tuesday 31-Mar-20 09:31 AM
On top of all the other stuff going on at the moment in South Africa it could not have come at a worse time. Although it is not widely covered in the media due to the seriousness of the Covid 19 outbreak it will still have a big impact on each and every South African for the next 3 years.
Natasha said:
on Tuesday 31-Mar-20 09:31 AM
Well we all new that this is going to happen it wasn't a suprice at all, we are at the bottom now but i trust that we will come out above even stronger then what we were. We just have to keep faith and believe that things will get better.
Melandre' said:
on Tuesday 31-Mar-20 09:25 AM
As you say at least it is said now. We have gotten it out of the way. It came as absolutely no surprise, possibly at the worst time, but there is no better place for growth than rock bottom. Yes, this country is consumed and enveloped in corruption, mismanagement and our major SOE's are bankrupt. And yes, SA is in a lot of debt - there is a slim possibility of full repayment. However, we have been dealt our cards, now is the time for this country to reflect and grow, unite and strengthen. We are currently busy plucking the weeds from our garden, we are no longer in a position of stagnation, but rather on breathing grounds for complete transformation.
Alexis said:
on Tuesday 31-Mar-20 09:20 AM
It was inevitable to say the least. I had read it on EWN that this had occured. Unfortunately, we are at a crossroads in South Africa and whatever happens, so it shall be. Though I do like the positive written.
Courtney said:
on Tuesday 31-Mar-20 09:20 AM
Wrong people in the Government who's dealing with the money. I hope everything changes and our country can get a better name as well after this covid-19.
I also think this is a huge eye opener.
shanelle said:
on Tuesday 31-Mar-20 09:07 AM
The news was not surprising at all. South Africa is in so much debt, we face so much corruption and mismanagement. This does not come at a good time since we are all already so anxious due to the pandemic.
Lourien said:
on Tuesday 31-Mar-20 08:57 AM
We have all been living with a sense that our country was already in junk states, so this news did not come as a surprise at all. We have been waiting for this announcement for sometime. South Africa is a strong country and I really hope that we will be able to pick up the pieces and come out stronger at the end of the day.
Megan said:
on Tuesday 31-Mar-20 08:44 AM
Truth is, for a very long time the government has not put money in the right place. When we most need the money, like now during this pandemic, we rely wholly on other wealthier businesses to help us out with billions whereas the government couldn't even give 1 billion. Money is wasted in this country and that's the problem.
Michelle Smillie said:
on Tuesday 31-Mar-20 08:33 AM
Unfortunately this will indeed make a big impact on our economy, but I think our President made a wise decision with the lockdown and putting the lives of the people above the state of the ecenomy. A country can always recover from a worsened ecenomy, albeit difficult, but lives lost cannot be returned. Let's just hope that our country survives all of this ecenomically and I think our President has a big wieght on his shoulders in this regard.
Nicolene said:
on Tuesday 31-Mar-20 08:27 AM
Now that our economy has been downgraded to "junk status" I am sure our interest rates will definitely increase. I feel so sorry for the less privileged people especially now with the lock-down. How will they be able to cope?
patrick said:
on Tuesday 31-Mar-20 08:20 AM
I think Moody's was a bit opportunistic. It looks like they were waiting for national shut down to ride on its back when everybody is occupied by it. We know we have serious Eskom issues but we have been through out showing the resolve to solve them. On the other hand one cannot ignore the corruption during Zuma' term. The economy is also not growing. The current President a huge task to clean the Anc and therefore the country. He cannot fail else we are all doomed.
Karien said:
on Tuesday 31-Mar-20 08:11 AM
The rand being downgraded to "junk" status was no surprise. It has been coming for years now. The struggling SOEs and the amount of money the government has borrowed in last few months alone is what pushed our currency to now be regarded as a non-investment grade speculative. The amount of debt South Africa has is very high, and with interest rates expected to increase the chances of paying back the borrowed money is very slim.
Roxanne said:
on Tuesday 31-Mar-20 08:00 AM
It all goes back to the saying the storm before the calm. It all looks bad now but we have a chance to rebuild our country.The pollution has gone down with the lock down. Our country will be beautiful again and in time the economy will rebuild itself. But there is a long road ahead of us
Nikita said:
on Tuesday 31-Mar-20 07:50 AM
You can sense how afraid people are about the future. I am surrounded by many self employed people and the uncertainty of how long this lock down will last in itself is causing great anxiety. It definitely will not be easy but I am certain that we will build the economy again. For now you have to sit tight and hold on to your pennies where you can.
Brumilde Cronje said:
on Tuesday 31-Mar-20 07:50 AM
We have been junk status before, and like the president said it could not have come at a worse enough time... Well once you are at the bottom the only way to go is UP. Here is hoping for the best
Melissa van Tellingen said:
on Tuesday 31-Mar-20 07:45 AM
I must say I've been expecting it for quite some time. It was just a matter of time I suppose with the Covid 19 outbreak in SA.
david said:
on Tuesday 31-Mar-20 07:43 AM
congratulations to the ANC.
my house is certainly going to cost more,
unfortunately the value has probably decreased quite a bit...
i wonder when the south african voter, like the abused woman, is finally going to be raped and beaten by her drunken partner for the last time.
Johannesburg based attorney specializing in personal injury matters including Road Accident Fund claims and medical negligence matters. My interests include golf, reading and the internet and the way it is constantly developing. I have a passion for life and a desire for less stress!
