In a statement on Friday‚ Moody's said: "The decision to place the rating on review for downgrade was prompted by a series of recent developments which suggest that SA's economic and fiscal challenges are more pronounced than Moody's had previously assumed".
"We welcome the decision by Fitch to leave the South African local and foreign currency credit ratings unchanged, albeit at sub-investment grade", said managing director of the Banking Association of South Africa Cas Coovadia.
Standard & Poor's Global has lowered South Africa's ratings due to a weakening economic and fiscal trajectory.
"Weak GDP growth has led to further deterioration of South Africa's public finances beyond our previous expectations", S&P said in a statement.
"As a effect, South Africa's economy has stagnated and external competitiveness has eroded", it added.
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The downgrade by S&P comes after Finance Minister Malusi Gigaba shocked markets on October 25 by flagging sharply weaker growth expectations, a wider budget deficit and rising government debt.
S&P announced the downgrade on Friday, citing a further deterioration in the country's economic outlook and public finances, and Moody's placed South Africa on review for a downgrade.
"Granted, it's not as bad as a downgrade from both rating agencies might have been, but it is not much better either", Khan said.
SA received a reprieve from Moody's on Friday night‚ with the agency remaining the most generous of the big three credit rating agencies in being the only one to still rate both foreign- and local-currency South African government bonds as "investment grade".
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The rand, which was trading at R13.90 to the USA dollar before S&P's announcment, has fallen to R14.15$, a drop of 25 cents.
That could have forced index-tracking and rating-constrained funds to sell more than $10 billion in debt, analysts have predicted.
South Africa's government is mulling fiscal reform aimed at improving economic growth and budget prospects as investors and businesses are losing faith in the failing economy.
"Sub-investment grade credit rating (and in this instance on the local denominated sovereign debt)‚ prevents many institutional investors from holding South African bonds‚ resulting in capital outflows".
Kristian Rouz - South Africa is ready to implement fiscal reforms in its next year's budget after the worldwide rating agency S&P cut its local currency debt rating further into "junk".
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South African debt has already been dropped from one the widely used global bond indexes, the JPMorgan Emerging Market Bond Index Global.