A downgrade by the ratings agency seems likely, but SA’s financial markets could be limited by attractive 10-year bond yields, among other things
While SA’s risk of a credit rating downgrade by Moody’s Investors Service is heightened, the country could be “insulated” from the expected losses, according to the Reserve Bank.
“This could increase the risk of a sovereign credit rating downgrade to sub-investment grade by Moody’s,” the Bank said. “Institutional investors tend to exhibit more stable and less momentum-driven behaviour given their medium- to long-term strategies, resulting in less pro-cyclicality in the behaviour of portfolio flows,” the Bank said, adding that net portfolio outflows have always been less than estimated.
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