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The Market Has Already Downgraded South Africa to Junk

  • Sovereign risk premium is higher than investment-rated peers
  • Country’s bonds aren’t benefiting from global hunt for yield
Johannesburg's central business district.
Johannesburg's central business district.Photographer: Waldo Swiegers/Bloomberg
Updated on

Moody’s Investors Service hasn’t said it, but investors already think it: South Africa’s credit is junk.

The company, which rates South Africa’s debt Baa3, the lowest investment level, is due to review its assessment in November. Given Eskom Holdings SOC Ltd.’s financial woes and its implications for government debt, the market is pricing in a downgrade.