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CAPE TOWN, Dec. 2 (Xinhua) -- Rating agency Standard and Poor's (S&P) on Friday decided to keep South Africa's foreign currency rating one notch above sub-investment grade, but lowered its long-term local currency ratings.
"We affirmed the long-and short-term foreign currency ratings at 'BBB-/A-3'. The outlook on the long-term ratings remains negative," S&P said in a statement.
The agency affirmed all other foreign currency ratings with a negative outlook.
S&P cautioned that South Africa continues to depend on resident and nonresident purchases of rand-denominated local currency debt to finance its fiscal and external deficits.
About 90 percent of South Africa's 2.4-trillion-rand (173 billion U.S. dollars) debt is held in local currency, and the cut could see the country fall out of global bond indices, preventing institutional investors from buying its debt.
"The proportion of rand in global foreign exchange turnover has also declined to just below 1 percent on average over the past three years," the agency said.
S&P said it also believes political events have distracted the country from growth-enhancing reforms, while low GDP growth continues to affect its economic and fiscal performance and overall debt stock.
The rand firmed sharply in response to the news, rising from R14.10 to the dollar at overnight close to R13.95 by 6:40 p.m..
Last week, another rating agency Fitch changed South Africa's outlook from stable to negative, while affirming its Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at "BBB-", which is one notch above sub-investment.
Rating agency Moody's has also kept South Africa's sovereign rating at Baa2, which is two-notch above sub-investment with a "negative" outlook. Enditem
