Following the disappointing mid-term budget speech by Tito Mboweni, the Rand reached its lowest level in weeks. Eskom’s rescue plan has nowhere really figured in either Pravin Gordan’s submission or Mboweni’s budget reason.
The government’s financial situation is rapidly deteriorating with the national debt of R3 trillion and a tax deficit of R53 billion.
Moody’s is therefore expected to downgrade the country to negative from where it currently stands at stable.
However, there are fears that Moody’s will downgrade the country directly to junk status which will affect Government bonds as the Citigroup’s World Government Bond Index contains only investment-grade securities.