Rand slips as junk rating decision looms

Johannesburg - The rand was under pressure on Monday as a likely credit downgrade due in the week weighed on sentiment and solid economic data from the United States hurt emerging markets.

By 08:45 the rand slipped 0.4% to R15.7860/$ following a closing at R15.7250/$ in New York.

Government bonds were flat in early trade, with the yield on the benchmark paper due in 2026 unmoved at 9.435%.

"When the upward revision to US Q1 real GDP growth rate came in, the South African currency knee-jerked weaker," analysts at NKC African Economics said in a note.

"The higher estimate for economic expansion during 1st quarter in world's largest economy provides more justification for those calling for a hike by US Fed in June."

Revised US gross domestic product data for the first quarter released on Friday showed that growth did not slow as much as first estimated, raising bets that the Federal Reserve could raise interest rates as early as next month.

On Friday, ratings firm Standard & Poor's is due to publish its decision on South Africa's credit rating, which currently sits one notch above subinvestment.

A recent Reuters poll found that S&P's and Fitch, also expected to decide on the sovereign rating in June, would cut South Africa to "junk" status in 2016.

On the bourse, the Top 40 futures index was up 0.3%, indicating markets would open firmer.