South Africa More Risky Than Turkey as Fitch Downgrade Looms
- Cost to insure South African government debt surpassed Turkey
- Commodity prices and slow growth add to investors' concerns
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Investors see more risk in South Africa than in lower-rated Turkey as the creditworthiness of Africa’s second-largest economy looks set to step closer to junk.
The cost of insuring against a default by South Africa’s government for five years using credit-default swaps surpassed that of Turkey on Oct. 23, two days after the government widened its budget-deficit targets and the day riot police battled protesting students on the lawns outside President Jacob Zuma’s office in the capital, Pretoria. The South African contracts are priced 13 basis points higher than those of Turkey, which is embroiled in the Syrian conflict and threatened with sanctions by Russia.