The SA credit downgrade “junk status” was the topic on everyone’s lips for many years, with horror predictions of a Rand collapse, mass exodus of investors and a market in serious trouble. So topical was it, that we discussed it in no less than 5 newsletters from July 2016 to November 2019. On 27 March 2020 Moody’s downgraded SA’s international credit rating to below investment grade.


July 2016 – South African Credit Rating

“undoubtedly serious but it is already priced in”

April 2017 – How does the downgrade affect you?

“could result in short-term Rand weakness with interest rates and inflation easing up”, “already priced in and diversification is key”

November 2017 – What happens to the stock market and currency when there is a downgrade?

“looking at other countries who have been downgraded over the past 20 years, bond yields increase, could have amazing returns from the market, currency declines leading up to the downgrade then strengthens for 3 months and in some cases much longer”, “we believe the news is priced in”

September 2019Are we headed the same way as Greece?

“After the Greek downgrade, government bonds returned 40% a year for 10 years”, “stick to your plan and stay invested through the cycles”

November 2019 – The Moody’s Downgrade Risk

“Government is facing a potential debit trap”, “the SA market is the cheapest it’s been for a long time”


In February 2020 COVID-19 shocked markets and in March Moody’s finally downgraded SA. While COVID has no doubt been the main driver of market behaviour, it is interesting to note what has happened in the 12 months following the downgrade.


The Rand has strengthened 13.5% against the dollar, 6% against the Pound and 10% against the Euro in the past year.

While the demand for our resources has helped, offshore investors do not seem to be put off from investing in SA and the Rand has been the best performing emerging market currency.


The JSE has climbed 60% in the year since the downgrade. This despite the Rand strengthening which normally puts a dampener on our offshore heavy market.

We have talked before about how the JSE follows the same path as the other emerging markets, and its proven true again through COVID where little significance is put on what is happening locally.


Bond yields have fallen 18% meaning that the government can borrow money cheaper.

The downgrade was supposed to trigger a mass exodus of up to R250bn but this turned out to

be around R75bn.


While there is no doubt the downgrade will have lasting effects on the SA economy and government borrowing for many years to come, it is great to see that the forecasts we were hearing turned out to be just that, forecasts.