Economics
Recession Reignites Concerns South Africa’s Credit Rating Will Be Downgraded
- Moody’s is due to announce credit-rating decision on Oct. 12
- Rand slump stoking inflation, complicating central bank’s task
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South Africa’s unexpected slump into a second recession in almost a decade has boosted fears of another round of credit-rating downgrades that could see a sell-off in local-currency bonds.
The cost of insuring the country’s debt against default for five years using credit-default swaps spiked to the highest since November 2016 while yields on the government’s benchmark local-currency bonds due in December 2026 rose to a nine-month high. The rand weakened the most against the dollar among major and emerging-market currencies.