By Rene Vollgraaff
(Bloomberg) — South Africa’s credit rating will remain above junk if Fitch Ratings downgrades the nation’s debt in June, a senior official of the company said.
Fitch will lower the rating by one level if it decides to reduce it on June 5, Richard Fox, head of sovereign ratings for Middle East and Africa, told reporters on Tuesday in Johannesburg. Weak economic growth is weighing on the rating, he said.
Fitch rates South African debt at BBB, the second-lowest investment grade level, with a negative outlook. Standard & Poor’s lowered its assessment for South Africa in June to BBB-, one level above junk.
Power shortages are curbing growth in Africa’s second- largest economy, which the government estimates will expand 2 percent this year, down from a previous forecast of 2.5 percent.
“The pressures on South Africa’s rating are long-term,” Fox said. “It’s rarely one indicator or one event which results in a rating action. This concept of junk is something that is not on out radar screens at this stage.”
