Tag: downgrading

Few people realise that the largest source of business funding in South Africa is provided by private companies themselves. Businesses extend credit to their customers and obtain credit from their suppliers, usually in the form of short-term funding which lasts for 30 to 60 days per transaction.

It has happened! For months we, as a nation, have been struggling and fighting not to be downgraded to junk status, but on Monday, 3 April 2017, following the cabinet reshuffle, it was announced that South Africa’s sovereign credit rating was cut. However, what does that mean?

On 3 April 2017, Standard and Poor’s Ratings Services decided to cut South Africa’s international credit rating from BBB- to BB+. A rating of BB+ is considered below investment grade (sometimes referred to as "junk status”). Unfortunately, the negative ratings outlook was also retained, suggesting that S&P could revise the country’s credit rating lower at year-end should the fiscal parameters deteriorate significantly.

South African President, Jacob Zuma, has decided to remove the Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas, from their posts.

After a tense period in which the three major global ratings agencies assessed the local economy, government policy and more, South Africans can head...