Posts tagged with 'downgrade'

 

SA has a national debt of R3 trillion rand and tax deficit of R53 million

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Following the disappointing mid-term budget speech by Tito Mboweni, the Rand reached its lowest level in weeks. Eskom’s rescue plan has nowhere really figured in either Pravin Gordan’s submission or Mboweni’s budget reason.

The government’s financial situation is rapidly deteriorating with the national debt of R3 trillion and a tax deficit of R53 billion.

Moody’s is therefore expected to downgrade the country to negative from where it currently stands at stable.

However, there are fears that Moody’s will downgrade the country directly to junk status which will affect Government bonds as the Citigroup’s World Government Bond Index contains only investment-grade securities.

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SA’s fiscal position – Great possibility that economy will be downgraded to junk status

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Tito Mboweni is expected to paint a gloomy picture of the country’s fiscal position later this month.

The agency Moody’s has had a fairly stable rating so far, but economists warn that the view may change to negative.

Moody’s has already made “negative” comments at its quarterly conference last week. The chance that SA will be finally downgraded to junk status is a possibility, and this is due to the poor growth and continuous cash injection into the country’s bankrupt state intimacies such as Evkom, SAA, Denel and SABC.

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The Rand remains on a rollercoaster of volatility -the currency continued to weaken due to the heightened global growth risks after talk of financial bailout for Eskom

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Last week’s poor global data is indicative of a worldwide economic rough patch. Talk of another massive financial bailout for Eskom has put South Africa on thin ice with Moody’s. The country is said to be fighting a losing battle to keep its last remaining investment grade credit rating.

Foreigners have already begun dumping R2 billion worth of government bonds. This comes before what looks like an imminent downgrade to junk status, which is placing a huge amount of pressure on the local currency.

Last week’s poor global data is indicative of a worldwide economic rough patch.

Talk of another massive financial bailout for Eskom has put South Africa on thin ice with Moody’s. The country is said to be fighting a losing battle to keep its last remaining investment grade credit rating.

Foreigners have already begun dumping R2 billion worth of government bonds. This comes before what looks like an imminent downgrade to junk status, whic
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Foreigners are dumping SA bonds at a rate of almost R2 billion ($132 million) a day as junk status looms

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Investors have been dumping South African government bonds at a rate of almost R2 billion ($132 million) a day in August.

With issuance increasing and a downgrade to junk a looming possibility, non-residents have sold a net R14.4 billion of the debt in August so far, according to JSE data compiled by Bloomberg.

That’s an average of R1.8 billion a day. The sales have wiped out inflows at a time when the country needs foreign investment to close a current-account deficit that was equivalent to 2.9% of gross domestic product in the first quarter.

The government increased the amount of local-currency debt sold at weekly auctions by 37% last week to help pay for a 128 billion-rand bailout for Eskom Holdings SOC Ltd., the state-owned electricity company.

That will push up borrowing and widen the budget deficit, placing the country’s last-remaining investment-grade rating at risk. Moody’s Investors Service, which rates South Africa’s deb
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