South Africa’s central bank warned on Monday that a ratings downgrade would hit the currency hard and see short-term interest rates rise 80 basis points while longer-term bond yields would likely increase by 104 basis points.
Higher borrowing costs would likely see the government allocate more spending towards debt-service costs, South Africa’s Reserve Bank in its monetary policy forum.
South Africa faces the prospect of credit downgrades to junk status as it grapples with depressed commodity prices, political upheavals and an economy that is barely growing.
Source: CNBC Africa