Fin24

Credit rating fears over Marikana ‘premature’

2012-08-30 16:17

Johannesburg – Concern that the violent developments at Lonmin [JSE:LON] Marikana mine may place SA’s sovereign credit rating in jeopardy is premature‚ according to Melanie Brown‚ managing director of ratings agency Global Credit Ratings.

Brown said that while concerning‚ events at the mine which left over 40 people dead should not have any impact on the country’s ability to repay its debt.

“SA’s credit rating has been downgraded by three different ratings agencies over the last 12 months. We do not ascribe to the same view and believe that SA is still an attractive investment destination‚” Brown said.

“However‚ such decisions do have a serious impact on an economy and we hope that no further downgrades occur as a result of Marikana‚” she added.

Ratings agency Fitch said the Marikana protests highlighted broader structural problems that have long weighed on SA’s credit rating. It changed the outlook for its BBB+ rating to negative from stable in January.

Ratings agency Standard & Poor’s also revised the outlook on its BBB+ sovereign credit rating for SA to negative from stable in March‚ citing policy risks linked to high unemployment‚ inequality and other social problems.

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Comments
  • jim.binnie.1 - 2012-08-30 18:02

    Forget about credit ratings for a moment and look at the stock market. Resources are falling fast (resource10 down 2.3% as I write this) and the Rand, at $8.48, has fallen through the floor. Investors are voting with their feet and walking away from South Africa. Government has to ACT NOW to improve investor perceptions of ZA as a preferred investment destination and not just rely on "pie in the sky" nice statements if they want to reduce unemployment. Start by re-looking at the Labour Relations Act from a potential investor's point of view and measures to improve labour productivity by linking salary increases to achieved improvements in worker productivity.

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