A city view of Durban, South Africa, Oct. 18, 2019. (Xinhua/Chen Cheng)
Moody's cited the country's continuing deterioration in fiscal strength and structurally weak growth as the main driver for the downgrade. The downgrade comes at a bad time for South Africa, which is under a 21-day lockdown that started on midnight Thursday in a bid to contain the rapid spread of COVID-19.
CAPE TOWN, March 28 (Xinhua) -- International rating Agency Moody's on Friday night downgraded South Africa's sovereign credit rating to junk status.
As a result, the country's investment grade was downgraded one notch to BA-1 from BAA3.
Moody's maintained a negative outlook for South Africa's growth prospects.
The agency cited the country's continuing deterioration in fiscal strength and structurally weak growth as the main driver for the downgrade.
The rapid spread of the coronavirus pandemic will exacerbate South Africa's economic and fiscal challenges and will complicate the emergence of effective policy responses, Moody's said in a statement.
People shop in a supermarket in Johannesburg, South Africa, March 23, 2020. (Xinhua/Chen Cheng)
It now estimates that South Africa's debt burden will reach 91 percent of Gross Domestic Product in the 2023 fiscal year.
So far, all three major international rating agencies have downgraded South Africa's sovereign credit rating to junk status, with Standard & Poor and Fitch doing so in 2017.
With the latest downgrade, South Africa will be kicked out of the benchmark world government bond index of local-currency debt, raising the possibility of triggering up to 194 billion rand (about 11 billion U.S. dollars) of forced selling as a result.
Moody's downgrade comes at a bad time for South Africa, which is under a 21-day lockdown that started on midnight Thursday in a bid to contain the rapid spread of COVID-19. ■