Friday the 24th of November may well be a momentous day for South African financial markets, specifically the currency and government debt markets.  S&P and Moody’s credit ratings agencies will be announcing their latest credit rating assessment for South Africa’s local and foreign debt.  This is unusually important because this assessment may tip South Africa’s local debt into “junk status”.  Should this happen there are many sources of funding that are no longer able to invest in South Africa.  This may presage capital outflows, a weaker currency, and more expensive debt – all things that South Africa can ill afford right now.

Please see the attached “Talking Points” note from Morningstar for a brief analysis on the background and potential implications for South Africa on tomorrows announcement.

Talking Points – by Morningstar