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South Africa Heading for Junk Downgrade, Rating Forecaster Says

  • Rennaissance says fundamentals don’t support current rating
  • Firm has correctly predicted 8 of 9 EM rating moves since May
An employee passes the 'Battle of the Markets' sculpture outside the stock exchange in Johannesburg.

An employee passes the 'Battle of the Markets' sculpture outside the stock exchange in Johannesburg.

Photographer: Nadine Hutton/Bloomberg

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Renaissance Capital, which has correctly predicted eight out of nine sovereign rating decisions in emerging Europe and the Middle East since May, is calling a downgrade to junk for South Africa next month.

That view is at odds with the majority in the Bloomberg survey, but Renaissance Global Chief Economist Charles Robertson says South Africa’s fundamentals have deteriorated significantly since May, when Moody’s Investors Service affirmed its Baa3 rating. The next review is on Nov. 1.