JOHANNESBURG, April 7 Ratings agency Fitch
downgraded South Africa's credit rating to sub-investment grade
on Friday, saying a recent cabinet reshuffle that saw respected
finance minister dismissed will likely result in a change in
economic policy direction.
Fitch changed its outlook for South Africa to stable from
negative. Fitch's downgrade to BB+ from BB- on both foreign and
local currency debt follows that of S&P Global Ratings which
also cut South African foreign debt to "junk" status.
Downgrades to junk from the two agencies could see South
Africa drop out of some widely used global bond indexes and
force international funds which track them or which are
prohibited from holding sub-investment grade securities to sell.
Fitch's move will almost certainly lead to a rise in
government debt-servicing costs, which will mean less money for
critical services such as housing, education and sanitation,
which could incite even more protests over service delivery that
have already rocked towns across the country.
(Reporting by Olivia Kumwenda-Mtambo; Editing by James