S&P is next scheduled to review South Africa’s sovereign ratings in November. Photo: Reuters

INTERNATIONAL - S&P Global Ratings said in a report published on Thursday that South Africa’s sovereign credit ratings were unlikely to be downgraded deeper into “junk” territory after Turkey’s ratings suffered that fate earlier this month.

S&P, one of two major rating agencies to rate South Africa’s foreign-currency debt below investment grade, said in the report that the country’s external metrics were solid and that its monetary flexibility was a credit strength.

The agency downgraded Turkey’s sovereign rating deeper into “junk” status on August 17 in the wake of a steep slide in the lira, which also rocked emerging market currencies such as the rand.

“The main reason for Turkey’s downgrade was our expectation that the extreme volatility of the Turkish lira and the resulting projected sharp balance of payments adjustment will undermine Turkey’s economy,” S&P said in the report.

“By contrast, we have a stable outlook on South Africa, reflecting a potential modest pick-up in economic growth, steady public debt dynamics, and our expectation that the government will gradually implement economic and social reforms.”

S&P is next scheduled to review South Africa’s sovereign ratings in November.

In May, S&P affirmed South Africa’s foreign-currency debt at "BB". 

- REUTERS