* SP cites structural problems for downgrade
* Re-affirms foreign, local currency ratings
* Downgrade follows similar moves by Moody’s, Fitch
(Updates markets, adds details, background, comment)
JOHANNESBURG, March 28 (Reuters) – South Africa’s rand
weakened against the dollar on Wednesday after ratings agency
SP downgraded the country’s outlook to negative from stable,
citing structural economic and social problems.
The agency said South Africa’s near-term political pressures
had eased and the Treasury remained committed to fiscal
consolidation, but added that problems such as high unemployment
and a structural current account deficit persisted.
“The negative outlook reflects the potential for a downgrade
if economic and social problems feed into the political debate
in the run-up to the 2014 elections and consequently further put
pressure on the policy framework,” SP said.
It reaffirmed South Africa’s foreign and local currency
ratings at ‘BBB+/A-2’ and ‘A/A-1’.
The rand weakened to 7.6650 to the dollar from
7.6430 just before the SP release. However, it recouped some of
those losses to trade at 7.6482 by 1200 GMT. The currency, which
had been weakening in earlier trading, was down some 0.7 percent
after the announcement.
Government bonds also fell, with the yield on the three-year
benchmark bond rising to 6.85 percent from 6.81
percent prior.
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