Since the official announcement of South-Africa’s ratings downgrade to junk status, many theories; concerns and questions have been raised with regards to what this means for the average citizen and our local economy as a whole. In answer to this, Old Mutual Wealth has released the first of many articles that addresses this topic directly, as part of their weekly ‘wealth intelligence investment note’ publications. At MyPlan, we believe that knowledge is power and accurate information is key.

Below we have provided an introduction to this week’s article, to read the full ‘investment note’, kindly download the PDF below:

” South Africa experienced tremors of the seismic, political and economic kind over the past two weeks. A few days after the midnight Cabinet reshuffle in which Finance Minister Pravin Gordhan and his deputy were replaced, S&P Global Ratings cut South Africa’s sovereign credit ratings. Foreign currency bonds are now rated BB+, while local currency bonds are still investment grade at BBB-. The outlook on both ratings is negative. Fitch followed suit, cutting both foreign and local currency bonds to BB+, but with a stable outlook. Moody’s has postponed its ratings announcement by one or two months. In other words, the much-feared drop to junk status has finally arrived. This is undoubtedly a negative development for South Africa, but there are also several misconceptions around the implications of a ratings downgrade. “