Credit rating agencies Fitch and Moody's cut South Africa's sovereign ratings to junk on Friday amid rising debt and likely weakening in the fiscal strength, while S&P Global affirmed on hopes that credit strength will offset them. Fitch has lowered South Africa's rating to 'BB-' from 'BB', while Moody's lowered it to 'Ba2' from 'Ba1'.
Fitch sees the country's GDP to remain below 2019 levels even in 2022 as the debt burden increases pressure on public finances in Africa's most industrialised economy.
South Africa is likely to see more downgrades in the future since Moody's and Fitch have cut their sovereign ratings on the country to negative.
In March, Moody's became the last of the big three international ratings firms to downgrade South Africa to sub-investment grade, after S&P Global and Fitch moved there in 2017.
South Africa is likely to post a budget deficit of over 15% of GDP in the fiscal year ending March 2021, the highest in post-apartheid history, the National Treasury forecast at the last month's mid-term budget.
However, S&P Global affirmed its ratings, while keeping its outlook on the country stable on the assumption that while the economy faces a sharp COVID-19-related contraction in 2020, it should rebound from 2021.