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South African Credit rating agencies, Moody’s and Fitch, have both downgraded South Africa’s credit rating. The country’s credit rating further plummeted into junk territory making debt issuance both difficult and expensive

Moody’s dropped the credit rating two steps below investment grade to Ba2 from the previous Ba1 level.

”The downgrade reflects the impact of the pandemic shock, both directly on the debt burden and indirectly by intensifying the country’s economic challenges and the social obstacles to reforms.

South Africa’s capacity to mitigate the shock over the medium term is lower than that of many sovereigns given significant fiscal, economic and social constraints and rising borrowing costs.” Moody rating action report

 

Additionally, Fitch stepped down the countries rating to a BB minus which is three positions below investment grade.

The ratings apply to both local and foreign borrowing.

Another credit rating agency S&P maintained South Africa’s rating which is currently