Ernest Hemingway famously wrote that a man goes bankrupt gradually then suddenly. There might be something of that in the news that Big Three ratings agency Fitch has dumped South Africa – officially cancelling its registration ahead of closing down its office in the country. At this stage, nobody has articulated the reason, but Fitch did issue a negative report three months ago and like Moody’s and S&P, has South African credit at the very last investment grade level, but on a negative watch. Which means unless there’s an improvement, in the next ratings report a slide to “junk” status is possible, with all the negative implications that will bring. Maybe Fitch simply doesn’t want to be around to catch the expected fallout from local politicians? – Alec Hogg
JOHANNESBURG, Sept 4 (Reuters) – South Africa’s financial watchdog said on Friday it had cancelled the registration of Fitch Rating’s South African affiliate following a request from the company.
The Financial Services Board (FSB) said the ratings issued by Fitch Southern Africa would stay valid for four months.
“The cancellation of the registration means that Fitch Southern Africa, or any other Fitch office or entity, will no longer issue credit ratings for regulatory purposes in South Africa,” the FSB said in a statement.
Fitch Southern Africa said in a statement it was discussing with the FSB how best to remain transparent and provide credit opinions while respecting South African legislation.
Tembisa Marele, a spokeswoman for the FSB, said she was not aware of any fallout between Fitch and the South African government.
South Africa’s Finance Ministry declined immediate comment.
In June, Fitch Ratings cut its 2015 and 2016 forecasts for Africa’s most advanced economy due to energy supply constraints and affirmed its BBB rating with a negative outlook.
Fitch was not immediately available for comment.