Moody's cuts South Africa's credit rating to junk

[Hein Kok]

I also think the market already factored it in, it will just mean that the recovery post covid 19 will take a lot longer with good governance, if the government operates as in the past we will never recover.




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[FNBROWNING]

Our problem is that we do not have the income to finance this. Taxes are way down because industry is struggling and everyone is losing money on local markets so no money there. We are even struggling to export with the worldwide lockdown. We may have to print money. Yes the US prints money but it is the worlds reserve currency and still (I hope after this) an economic powerhouse. The downgrade was to a degree factored in and Moody's released it after markets closed but make no mistake we are hitting a wall. Covid could not have come at a worse time.

[SoldierMan]

Man, I hope the currency doesn't fall too much. I was in the process of selling a property and then stocking up on gold and silver. That all came to an end with Corona. I just hope metals are affordable when all this finally ends. Anything could happen between now and then. From what we have seen, the world economy is being rattled but not so much that if it all ends the markets couldn't recover fairly quickly. Main Street might be another case all together.

[Sean KZN]

U.K. has been downgraded as well, just not to junk.
All a bit of a cluster at the moment, and I doubt were alone with this.

[AJR]

SA bonds - now in the "junk pile" - are probably the best buy (within the junk pile) for someone stuck with low interest rates (USA), or even negative (Japan). It would be an attractive buy for someone who currently gets -1%, as opposed to (with some risk) perhaps 9%. Business as usual. Problem is SA's credit just became more expensive, and the goverment owes "a lot". Fortunately our (current) borrowings are largely ZAR based, not USD, which means they remain potentially payable with reasonable economic reform. Zuma's 10 years have come home to roost. Keep your eye on Makhura & Magashule blindsiding CR: that's the economic calamity we should be concerned with.

[FNBROWNING]

The big question is where we get the money to pay the bonds at our high interest rate.We are in a catch 22 position in that our interest rate stifles growth hence low likelihood of economic growth but if we drop it much more our currency devalues even further.