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Cape Town - Raenette Taljaard, the Executive Director of Economic Research Southern Africa, says while rating downgrades are never positive, SA was given a "stay of execution" on Friday.
This is because Moody's, one of the big three ratings agencies, did not downgrade SA's sovereign debt, choosing rather to put it on review for downgrade.
"No rating downgrade is a positive development whether you are Argentina, South Africa, Brazil, or Russia,” says Taljaard.
“I think that in some aspects it could have been worse if we had exited the World Bond Index, which we did not do courtesy of Moody’s reserving, in essence, their position until they see the budget in 2018. So even though the consequences were devastating, in principle it could have been even worse.”
Late on Friday evening S&P downgraded South Africa's long-term local currency rating to "BB+" - or junk - with a stable outlook, while rival ratings agency Moody's placed the country on review to be downgraded.
READ: S&P Global downgrades SA to junk, Moody's places SA on downgrade review
Last week Thursday Fitch had affirmed SA's long-term foreign and local currency debt ratings at junk with a stable outlook.
This means that, of the three major ratings agencies, only Moody's has kept SA's sovereign debt at investment grade.
“So we have in essence a bit of a stay of execution to see what happens in the budget next year, and that is where the pressure points will really coalesce," she says.
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